SAR #8366

The End is Near!

War There! War Now! There is a segment of the American press and public that thinks a "war" between Israel and the Palestinians is a Good Thing. First off, it is not a war - it's even more lopsided than the US vs Saddam 1.0 was. It's also not justifiable, but to find that out you have to read non-US media. Any non-US media.

Informed Source: Paulson's handed out another mumbo-jumbo explanation for giving GMAC another $6 billion. Asked if this would become a monthly occurrence, a Treasury official said there is no cap or deadline for aid to automakers.

Great Leap Forward? Trying to avoid another short-lived burst of consumerism, Mr. Obama wants to create 3 million new jobs. There now are only 1.5 million people unemployed in the construction field. How will he employ constructively employ all the unemployed cashiers, burger flippers, and unskilled Wall Street paper shufflers? Send them to the countryside with hoes?

Janus: Looking back, we find that all most of the experts were wrong. Looking forward, we suspect nothing will change.

Lessons Learned: Various pundits, from credentialed economists to respected financial commentators, keep assuring us that "they" won't repeat the mistakes that lead to the Great Depression and made it linger so long. I agree. "They" will make entirely new ones, and recycle some of the old ones - and give them new names. The results look to be the same.

Baby Steps: The SEC has halted a dangerous Ponzi scheme that had bilked over $23 million from investors. The scheme had been running for almost an entire year.

Blame: The blame for the collapse of the financial-capitalist economy belongs almost entirely at the doorstep of the CEOs and senior partners on Wall Street and their non-regulating co-conspirators they sent to Washington. Madoff was not the only crook in the room, nor the largest.

Again: The bad news is that Roubini's been making pronouncements again. The good news is he thinks the worst will be over by 2010. If.

Plan A.2: Governments have no Plan B. Those in power got their power the old fashioned way and are not about to give it up. Plan B is Plan A revised. The only system they know that gives them the power they want is the one that has already failed, so minor a fix that leaves them in control is what they're after. Much like Wall Street.

Santa's List: The FDIC's list of troubled banks has surfaced. Not the official list, but one constructed using the same criteria, sort of...

Check Kiting: Seems that Paulson didn't actually have the $5 billion he gave GMAC. But some of the money he'd previously given away hadn't been spent yet, so he used that. See, if you've got $350 in the bank and you've written checks totaling $350 but only $345 worth of them have cleared, you've still got $5. Right?

Progress report: Zimbabwe is going under. Pakistan is wobbling seriously. Riots go unreported in China. The Russian media report 'civil protests'. Greece has been burning for over 10 days. The riots have begun. Ah, Happy New Year.

Actual Facts: The old nostrum that the US was the destination of choice for investments is getting pretty threadbare. Private wealth - foreign private wealth, of course, there seems to be little domestic private wealth left in the US - is no longer sopping up Treasury debt. Seems that only China, Japan and Saudi Arabia are still rowing the boat. When they throw in the towel the drop in the dollar's value will be breathtaking. Reserve your seats now.

Footnote: New SEC rules will let companies count as an asset things that may or may not exist but that they think might show up. Starting with oil companies and what are called "unproven" reserves. My bank account is full of unproven reserves.

SAR #8365

Very few people are interested in voluntarily confronting reality. cryptogon

Pathos: Going wildly in debt far beyond any hope of repayment is what got us in this hole. Bernanke and collaborators claim the way out is through more debt. Which is more pathetic: An economist who knows he is a fraud, or one who doesn't?

The Semitic Wars, Volume 47, Chapter 13 : The Tribe of Abraham has again attacked the camps of their cousins the Palestinians. There are any number of apologists for Israel's brutality and the Palestinians' continued foolhardiness, but the best summary is simply this: It will end poorly, long before it ends.

Indigestion! Kuwait has backed out of a $17 billion joint venture with Dow Chemical, funding being a bit tight in Oil States right now. Too bad for Dow, which had planned to use that funding to pay off its $13 billion in debts from gobbling up Rohm & Hass.

Bad Moon Rising: Some are predicting the USA will erupt and split in six or seven smaller nations. Nope, there is not enough gumption left in the US citizenry to mount a decent protest, much less massive separatists movements. More likely the US will simply thrash around a bit and then fade into irrelevance. Governments will be overthrown, in more places than you might suspect (think Europe). But the US populace will sit in front of the TV, waiting for someone to reward them with their god-given right to happiness and success.

Never Satisfied : First the media was angry at Citibank for just sitting on the TARP funds they hadn't paid out in executive bonuses. Now that they've given $800 million to a South Korean company, everybody is mad at them even more. Can't win.

Two Aspirin: Somehow Obama, working with Bernanke and the new folks at the Treasury, is expected to rescue the US from recession, or at least lead the nation through the next year or two with but mild discomfort. No one should actually suffer, it's not the American way. And massive inflation, like depression, has been banned from the land forever. Call me when its over.

American Dream, II. There's a new reality. America once was about upward mobility. Not any more. Today a third of Americans earn less than their parents did. For that matter, their parents earn today what they did in the 1960's. PS, the rugged individualist is a fraud, too.

Biology 1 Bible 0: Thankfully, nature's urge to merge beats the heartfelt promise of chastity nearly every time. Seems silly to keep making bets you can't win. Sillier to urge others to set themselves up to feel guilty about being perfectly natural reproductive units.

Bake Sale: The US Treasury has to pump out some $2 trillion in debt in 2009. At the current low (verging on no) rates, who is going to buy them? The Saudis and the rest of the oil folks are no longer rich and the Chinese seem to be pushing back from the banquet table. So, other than Aunt Mildred - who lost all her money to Madoff - who is going to buy the magicians' flash paper?

Revealed Truth: It is no secret that the hard-copy daily newspaper is fading away. It will never quite disappear, but is already a walking ghost. Many decry this fate, see it as a turn towards darkness. Part of the mantra of the 'save the newspaper' faction is that Internet bloggers are no replacement for real journalists. Maybe not, but neither are today's newspapers.

Opportunity: Let's start an airport based rental service for clothing, footwear, coats, bathing suits and the other stuff once stuffed into suitcases and lugged to airports. Imagine an on-line rental agency with a selection of freshly laundered items in SML& XL sizes, which you could rent by the day/week at the destination airport of your choice. For a small fee they would supply basic toiletries and personal grooming appliances. All for less than the cost of checking a bag on United Screen Door and Airline, Inc.

Up Ahead: How many of the Alt-A and Option ARM mortgages that reset in the next couple of years are going to fall off the table? Many, many, if they were from WaMu during the "a thin file's a good file" period. Ah, the Twilight Zone.

SAR #8364

Suffering is neither preordained nor redemptive.

Keeping Track: What we all need for Christmas next year is an electric train set. From coast to coast and into the suburbs.

The Gas Tax : Congress wants the auto makers to produce highly fuel-efficient cars that will help deal with both the challenge of climate change and the certainty of dwindling gasoline supplies in the future. Problem is, the public thinks the future is next month, maybe the month after, and they want to drive there in a big SUV - after all, gasoline's cheap.

A Town in Oklahoma: How long will this turmoil last? How long before we get back to “normal?”

Low Rates! Yes, mortgage rates are marvelously low. Let's refinance! Except prices have fallen so far that most applications for a re-fi are turned down because 80% of the current assessed value won't pay off the old mortgage and the applicant hasn't the resources to pay off the old balance and put 20% down on the new loan.

Where's the Egress Express? The Taliban have now taken over a province astride the main highway to Kabul, just 30 miles from the capital. They administer the area, including providing a police and judicial system. Obviously the US and its allies are not winning this struggle and at best are slowly surrendering the countryside to the Taliban. Tell me again what the national interest is that keeps US troops there...

Ready, Steady: Falling oil prices have led to a falling ruble. To prevent this leading to a falling government, the Kremlin is prepared to put down "social demonstrations" should they occur. Their version of Northern Command, I suppose.

Get Your Bets Down: There is a 50/50 chance Russia will cut off gas supplies to the Ukraine on January 1st, for non-payment. Natural gas to Europe flows through the Ukraine. The last time Moscow cut deliveries to the Ukraine, Kiev simply siphoned from shipments earmarked for Europe. What are the odds it'll happen again?

Succinct: Headline "Consumer Spending Falls, as Unemployment Jumps." Also: Earth spins, sun rises.

Psst! Everybody wants to get through this bad patch in the economy - just survive, with some assets left. Yet none of the big boys are doing well, brokers are going broke. What to do? Who to believe? Sad truth - none of us has been here before and no one really knows what's going to happen next.

Roadsign: Geologists admit that oil's end is visible down the road a few decades. Maybe it is time to reconsider the wisdom of basing our economy on perpetual growth and our civilization on a finite resource.

Comfort, Sort of: The Fed has spent trillions bailing out the worst run companies in the country. Now Fed funds are paying less than 0.25% - essentially nothing. This suggests that there is no expectation of inflation, and no risk that the government won't be able to pay you back. Think that's so? Yes, the US does not have protesters in the street. Nor has the economy collapsed, yet.

SAR #8362 / Weekender

If it could be proved, it wouldn't be politics.

Received Wisdom: Reports claim Chinese GDP growth less than 5% is a recession, for it needs that much expansion to absorb new workers. It is thought unthinkable that China could have a negative GDP growth. Yet China's electric power output dropped 8% in November...

Prediction for 2009: Here's a summary of the experts' forecasts for the New Year: It's going to get worse, much worse.

Demand Decreases: By December 31st the world demand for petroleum will have dropped to 85.83 million barrels a day. That's due to rampant demand destruction of 700,000 barrels a day. This 0.8% decrease in demand provides support for economists' explanation of the $110 per barrel drop in prices. Some of the oil statistics floating around simply cannot be right.

Data: Retail sales, excluding cars and gasoline, fell 2.5% in November, 4% in December.

Who Can You Trust: How many other Ponzi schemes are there besides Madoff's? How many more financial psychopaths are ginning up fake account statements? How many little old ladies are there out there who think they have money in an account, but it's all just some big scam? How many more bad banks? How many bad brokerage houses? How many more bad companies with bad stock? How many more bad government entities with bad finances and worse bonds? How many bad pension funds? [Quoted from Byron King]

How Bad Is It? State lotteries are reporting a drop in sales as fewer and fewer suckers poor people waste their money play. If this represented growing wisdom it would be a good sign. It is most likely an indicator of desperation, when the gullible no longer buy the dream. Scratch 'em off.

Down Payment: Japan's factory output has biggest fall on record, declines 8.1 from October. Is Mr. Bernanke still sure the US should follow Japan's lead?

Need To Know: Bank of NY/Mellon, JPMorgan Chase, and 19 othersl were asked what they had done with the billions in taxpayer money they had received. None provided a specific answer, most claimed they chose not to disclose how they had disposed of the funds. Most simply said, "Go away, kid, you're bothering me."

Most Import Meal: Young people who skip breakfast tend to engage in sex earlier than those who eat Wheaties.

Machiavellian: Misdirection may provide a way for US politicians to finally accept what the population has wanted for the last ten or fifteen years - national healthcare. The US government cannot let a group of big states go bankrupt - as seems to be in store for California, New York and a few others. But bailing Arnold out is not a popular idea. If the Feds were to assume the enormous financial burden that healthcare is for every state - equally throughout the nation - it could go a long way to helping out the individual states while advancing a national healthcare agenda.

Demanding Supplies: Falling petroleum prices have derailed many current and planned oil-field projects. This guarantees the price of oil will rapidly rise once the world decides it wants to make things again. The top five net oil exporters shipped 24mbd in 2005, but will only export 18mbd in 2012, perhaps less. The decline in investment guarantees a rise in price. Teaching point: Small changes in demand have large effects on the price of a commodity in limited supply.

Connections: Kyrgyzstan's ongoing electrical blackouts are inconvenient. But without electricity the pumps that drive public water systems do not work. Air, water, food. In that order.

Porn O'Graph: Retail Sailing...

SAR #8361

"...some are more equal than others." George Orwell

Bernie, M'boy: The US financial system, the housing, equity and Treasury markets, are all Ponzi schemes, with the need for a constantly increasing source of fresh money to keep going. That funding is based on new debt, new dollars based on nothing produced, just the trust and confidence of the participants. Please explain the difference between Madoff and Paulson & Bernanke.

Sentence Completion: Mexico gets 40% of its budget from oil exports. Mexico will stop exporting oil in about 4 years. After that Mexico will ___________ .

Quoted: What happens when California lays off a quarter million employees, sends them to bed without their suppers? When it closes the homeless shelters and the clinics? When Arnold cannot afford to call out crews during next year's fire season?

The Enigma: No one understands what's going on in the oil markets, don't feel lonely in your confusion. Countries lie about reserves, production and exports. No one really knows how much is used nor how much is in storage. Demand figures are windage-adjusted guesses at best. Maybe oil was not worth $147 a barrel, but it is certainly worth a whole lot more than $37 a barrel.

Falling for You... Conditions in the United States are expected to get much worse, with forecasts that the economy will shrink by as much as 6 percent in the fourth quarter and keep declining for the next six months.

Location, Location, Location: Exxon is paying $6 million to 'resolve' charges stemming from the spilling of 15,000 gallons of diesel into Boston Harbor. If they had paid $400 a gallon for the Prudhoe bay disaster...

Quoted: "I don't think anything from historic episodes suggests that, left to itself, the economy is going to magically recover and come back to full employment," Roger Farmer, National Bureau of Economic Research.

Down and Down We Go, In a Spin: China is sitting on $1.3 trillion in US Treasury & GSE bonds paying a measly 2.9%. They accumulated this fund underwriting the US purchase of Chinese goods. But the US customer isn't buying any more. To keep its economy afloat, China can inflate its currency or dump dollars. Inflation lead to Tiananmen Square in the 1980's and the leadership has not forgotten. If China begins to dump dollars just as Bernanke gins up the presses to buy another $1.5 trillion for Paulson's TARP and Obama's stimulus, deflation will not be a problem.

North, Sloped: Production from Alaska's North Slope declined 3.8% this year and is expected to drop 4.9% next, to 665,000 barrels a day.

Ground Floor: A Madoff victim has brought suit against the SEC for its ongoing 'negligent conduct." Who will be first to seek damages from the Office of Thrift Supervision for its active connivance in falsifying banks' books?

China Clipper: China's crude oil imports are expected to grow only 1.2% for 2008, down dramatically from last year's 14.7% growth on top of a 14.5% spurt in 2006. The industrial world runs on oil; if the Chinese use only increased 1.2%, expect their GDP to be down, down, down.

Small Differences: Some anticipate social unrest, protests, riots. But it takes widespread suffering to trigger much beyond polite protests in the USA. When unemployment reaches double digits, when hundreds of thousands have their heat shut off, when the electric grid fails and the water supplies stutter - then we'll see social unrest. For now I'm content to predict increasing unemployment, decreasing public services and rising concern about food, heat and water. Once we have hungry, poor, homeless, cold, unemployed people, will be lots of time to predict social unrest. Weeks even.

Last Minute Gifts: The Treasury Department gave stocking stuffers to 92 more banks, and anointed Amex and Citi banks so they could take a swig of the old eggnog, too, while GMAC got promoted to 'bank holding status.' What's the rush? Shoring up for end-of-year reports? Painting the pig?

SAR #8659

Last Minute Christmas Gift !

A Word: Bring joy to yourselves, me, and others by putting the cursor right here and clicking. It'll take you to Second Harvest, where you can make a donation - at 10¢ for each day of the year you read SAR, call it $30. Thank you; you can take the rest of the day off.

Americans, a people with massive debts and no practical skills.

Progress Report: Pemex announced that crude oil production fell 6.5% in November from the prior year, Cantarell's output fell faster than expected, and exports fell 20% - all a little steeper than the Export Land Model predicts.

Ripley's: Japan's Mikuni credit rating firm says the US dollar will fall by half without some form of debt relief and recommended that Japan write-off its entire holdings of US Treasuries to help the US dig out from under its crushing debt. Japan is the 2nd largest foreign holder of US Treasuries.

2 Little 2 Late: Fitch sees "imminent default" for GM and Chrysler. A stocking stuffer.

Things Left Unsaid: The head of the Bank of Spain warns that the world faces a total financial meltdown. He didn't get the talking points memo.

Identity Theft: As the economy recesses, the American consumer will be less and less of a consumer. In a culture based on shopping and consumption, what happens to all the addicts when they can no longer play the only roles they know? Panic? Depression? Social unrest?

Freed Markets: The Office of Thrift Supervision allowed IndyMac bank to back-date receipt of $18 million from its parent company so it would appear healthier than it was. It failed two months later. Similar back-dating has been discovered at other banks 'regulated' by OTS. Lies, damned lies, and Government assisted lies.

Deflation Defined: Ten percent of US employers are lowering wages in 2009, another 10% are cutting their matching contributions to 401ks. Eat your gruel and be happy.

Should'a Could'a: Shell's UK chairman says that the North Sea has long since produced over half its reserves. He also pointed out that it would have been better to have conserved the resource for later when more problematical sources begin to dry up. Drill There, Drill Now.

Rumors of the Fall: Harvard admits to losing $8 billion from its $36 billion endowment fund. "Sources" are whispering that the losses were close to half - $18 billion - at the end of October. The end of year report card will be interesting.

Multiple Choice: November's existing house sales were down 8% from October and 10.5% from a year ago. 45% of them were facing foreclosure or sold for less than the mortgage. This is described as (a) a decline (b) a plunge (c) a collapse (d) expected.

New Jargon: Climate scientists are using 'ACC' more and more often. It stands for Abrupt Climate Change - as opposed to the gentle, gradual, old fashioned "by 2100...." predictions. The US is now expected to suffer abrupt climate changes within the next couple of decades. For example, seas will rise rapidly if melting of polar ice continues to outrun recent projections, and the ongoing drought in the US west may be the start of permanent regional drying.

Seasoned Greeting: Russia's Gazprom is reusing last year's Christmas card to Europe - the one that said their present may be delayed or diverted by those nasty Ukrainians who paid part of the overdue gas bill but 'restructured' the balance for payment in February.

Good Riddance: Finally Milton Friedman's Chicago School of Economic Thuggery is being chucked in the trash. What took so long?

Suçlu: The financial crisis was caused by the liberal press - according to Limbaugh, O'Reilly & Rove. Reminded me that the Turkish word for the accused, 'suçlu', and the word for the guilty, 'suçlu', are conveniently identical.

Porn O'Graph: Gingerbread houses.

SAR #8358

How often do "best case" scenarios pan out?

The Question: If the former chairman of the NASDAQ is a long-time crook, who could you possibly trust? Do you have any reason the think that Madoff was the exception? Didn't you just read the one about the bonuses?

Mene Mene Tekel Upharsin: "It is possible during the financial crisis to support domestic producers by raising customs duties." So said Russian Premier Vladimir Putin. But it could have been the leadership of India, Vietnam, Indonesia, China. In economic terms it's known as 'beggar thy neighbor' and gets a great deal of credit for making the Great Depression great. Of course none of the TARP money nor the Fed's trillions in guarantees is protectionist, we're free marketeers - funny ears and all.

Pathfinder: Analysts predict Britain's GDP will fall by 3% in 2009 and another 1% in 2010. Go deep and I'll throw it to you. Meanwhile, Japan's exports fell 27% YoY, with a decline of 25% in trade with China.

Obama's jobs program.... President Next promises 3 million new jobs within 2 years . The US is now losing over half a million a month. New math.

Things Better Left Unsaid: Economist Paul Krugman: "I'm fairly optimistic about 2010 ..."

Load Shedding: Nepal is likely to collapse both politically and economically if a way is not found to prevent electrical supplies from shrinking to a 6-hours-a-day level. Remember the term for shutting off the electricity, 'load shedding'. You'll see it again. Soon.

Coda: Lately the common theme in nearly every report on global warming has been: "These changes are occurring much faster than previously predicted."

Breaking the Dollar: As scared folks park their remaining cash in a Money Market, keeping the fund's net at a dollar and still making enough income to pay the light bill becomes harder and harder. Either they'll have to close, or start charging you to hold your cash, just like the Treasury

Cart, Horse, Cart: Today supply leads demand in the oil field, so prices and development investment are falling. Tomorrow demand will outstrip supply, prices will rise and it will be too late for investment. Takes these two to contango.

All Purpose Answer: Darth Cheney, after conferring with himself, has ruled that he doesn't have to leave any record of what he's done as VP for the last eight years. Or what he's done in any other capacity, for that matter. Just as well, we probably really don't want to know.

Operating Loss Projected: Who knew that General Motor's first name was Toyota?

Revival: Israel/Palestine. Chechnya. 9/11. Iraq. Somalia. Afghanistan. Nigeria. Congo. George Bush and the End of Days. Religion has reclaimed its rightful place as the leading cause of violence, torture, war and death. If my god is right, and he is, then yours must be wrong, and it is.

Increasing Decrease: Swiss glaciers are vanishing at an ever increasing rate, much like the US GDP.

Progress? The Army blows things up and hurts people, that's their job. But they wouldn't want to hurt people when they only meant to blow something up, so they've developed a 'wallpaper' that will cut down on the flying debris from explosions.

A Word: A lot of you folks read SAR regularly. I'm glad you do. Your appreciation is my reward. But if you'd like to "do something" in return for the non-stop entertainment, drag out your checkbook and write a healthy one to the local food bank. If you need help finding it, go to Second Harvest. If SAR's worth 10¢ a day to you, make it for $30 to cover the year. Thank you. Now back to our program...

SAR #8357

Don't mistake motion for progress.

Stocking Stuffers : Bailed out banks have awarded $1.6 billion of taxpayer money to the incompetents who lead them so poorly . Maybe Santa could bring these executives little shame - they have none of their own.

All Greeks to Me: What began as a protest against some casual violence by Greek police has become a much wider protest, verging on a revolt against the system. This may be the most significant European uprising in over 20 years, especially if protesting against can be transmuted into movement for a new societal orientation. The leaders of the West should be watching closely, as should their still loyal subjects.

Until Prop 8 Do Us Part: The nuts in California now want to undo the 18 thousand gay marriages that were performed in perfectly legal ceremonies.

Hot Stove Sitting: The US, faced with a frozen credit system like Japan's in the early 1990's, has dropped interest rates to near zero, like Japan did in the 90's. Japan subsequently learned that cutting rates without disclosing and disposing of toxic assets had no effect. The US is repeating the experiment to confirm that the Japanese were right.

One Liner: Hedge funds, except Mr. Madoff's, will have access to $200 billion in government money under a Fed program designed to support consumer credit.

Back to the Future? This summer the International Arctic Research Center discovered methane escaping from underwater Arctic permafrost at the highest concentrations ever measured. If more than a tiny fraction of the sub-sea methane is released, stopping catastrophic global warming would become impossible. The massive Permian-Triassic extinction is thought to have been triggered by a massive release of sub-sea methane, similar to an event now apparently beginning on the floor of the Arctic Ocean. This may be the most harrowing data on global warming ever reported.

Kitchen Sinks: Psst! Need a few bucks 'til payday? See your local Fed, it's got $200 billion set aside for auto loans, credit card loans, student loans, payday loans, title loans. Well, for derivatives backed by such loans; wouldn't want Ben to step on Vinny's toes.

Fearing Fear: Homeland Security seeks to arm commercial flights with anti-missile lasers. Does anybody do a cost/risk analysis on these things? How's the odds match up with the danger of doing your Christmas shopping at WalMart?

Semantics: The Pentagon has decided to comply with the Iraqi Status of Forces Treaty, which requires all US combat troops be out of Iraqi cities by June 30, 2009 and entirely out of Iraq by January 1, 2012. This will be accomplished by reclassifying 70,000 soldiers as "support troops."

Good News / Bad News: The good news that most of us will live to see the effects of global warming. The bad news is that most of us will live to see the effects of global warming.

Sentence Completion: Waterboarding is a war crime. The US has hanged enemy personnel for this crime. Dick Cheney has admitted approving waterboarding at least one specific prisoner. Dick Cheney should be ________________ .

Secret Plan: Paulson says there never was a playbook, which we all suspected. But how were they able to screw up so much, so consistently?

Top This: While Madoff stole $17 - $50 billion (reports vary how much was stolen, how much simply lost), his 'investors' (better we should see them as unindicted co-conspirators) will be getting back some $17 billion they paid in taxes on capital gains Madoff told them they had made over the years. They hadn't really, so Uncle Sam has to give back the tax payments.

Fine Print: Iraq's parliament has voted to reject a law that allowing troops from Britain, Australia, and some other countries to remain beyond the end of this year.

Reasonable Observation: Civilization is a collective agreement to follow certain rules which groups adhere to as long as there is clean water, food, and some degree of security. Absent these basic requirements, the enterprise dissolves. Witness Zimbabwe. Or Greece... or Pakistan... or Belgium

Porn O'Graph: Money, supplied.

SAR #8355/Wekender

The history of money is replete with riots.

Silver Lining: Oil is significantly underpriced and the big boys know it. They are socking crude away, with the futures market guaranteeing them a $10 a barrel profit. It's called 'contango'. Wanna dance?

Adjustments: Reporters are pointing out difficulties in comparing today's unemployment numbers with historical records due to this and that. Far more startling is that only 35% of the unemployed in the US qualify for unemployment payments.

Cut It Out: Undersea cables carrying telephone and internet service between Europe and the Middle East have been hit by "failures". Last January two such cables severed by a dragging anchor. Another example of non-redundant systems' vulnerability to the unanticipated.

A Curious Turn: Some are predicting that next year loan repayments will surpass new mortgages extended. Paying off debt is deflationary.

Who benefits? The biggest string on the automakers' loan is that they "quickly" reduce their debt by 2/3rds. Quickly, as in before they go bankrupt when this crust is gone. The GOP's union busting is in there, too, but the important thing is the big money institutions and individuals will have been bought out before the bankruptcy occurs and the common shareholders wiped out.

Reprise? The Soviet Union collapsed following the collapse of oil prices in the late 1980's. Russia is quickly changing from petro-rich to debtor nation, a fundamental step in that dance. Even $50 a barrel would pinch its social economy. Same with Iran, and at $30 for a couple of years Saudi Arabia could become an interesting place. Governments, like economies, run on oil.

Weather or Not: I know, I know, it snowed in Las Vegas. Yet over the last decade NOAA has recorded 230,000 new highs and but 110,000 new lows. Higher highs, fewer new lows. Sounds like a trend. And snowfall? Why, when I was a kid...

War on Unions: The Bush auto loan requires the UAW take wage cuts that will put GM/Chrysler "wages" on a par with transplant auto factories. But "wages" here means total labor cost including pensions and healthcare for retirees. In that current workers are paid roughly the same as their counterparts in Tennessee and Alabama, in order to reach this number current UAW workers will have to cuts to convenience store clerk levels. This is may be a sticking point in the process.

Business As Usual: We're supposed to be shocked that a broker lied to his clients and enriched himself at their expense. Why? How is this different - other than scale - from business as usual on Wall Street? Madoff was more efficient, not bothering with a lot of the mumbo jumbo middle steps, but the end result's the same - a fool and his money, parted.

Boosterism: Japan is planning to buy $227 billion in stock "to help stabilize" the market. How did this approach slip past Hank?

Cultural Difference: Belgium's supreme court found that the current government had interfered with the judicial system, and the prime minister had the good manners to propose his government's resignation. Unlike the US, where that sort of thing is routine in Bush's Just-Us Department.

Demand: The price of oil has come down farther and faster than ever, faster than demand dropped. The US drop in demand is down 4% from the peak, and is well in the lower range of the 5 year average daily demand. If OPEC is able to stick to the announced cutbacks in production, the price about 6 weeks out will be interesting to watch.

Non News: The dying Bush administration has decided to regulate the regulation of carbon dioxide emissions so that the EPA cannot control the gases causing global warming. EPA head Stephen Johnson emphasized that the ruling was made to protect the economy, not the environment.

Porn O'Graph: The Piggy Bank's broken.

SAR #8354

Does anyone outside their immediate family still regard

our leaders as leaders?

Facts Not In Evidence: The article asks: Are biofuels still economically feasible? Which begs the real question: Were biofuels ever economically feasible? Or morally?

Quagmire: California is first among equals, as the state needing the largest handout the soonest. But like AIG and Iraq, once will not be enough and there is no exit plan in sight.

Ozymandias: Scientists have discovered both a new type of pterosaur (flying reptile) and a 65 foot long sauropod. A cautionary reminder of the permanence of change.

Sir Lance A Lot: Hank Paulson, who has done such a wonderful job in saving the investment banks and the entire financial/credit system, has rushed off to Detroit to save the ugly sisters. He doesn't actually have to rescue them, just keep them on life support until Obama takes office.

Winter Advisory: Twenty percent of US households were behind on utility bills at the end of last winter, and five percent had service terminated for non-payment.

Huffing & Puffing Keep in mind that Bernanke & Co. are striving mightily to restore the status quo, to let the Larry Kudlow's go on believing that financial capitalism actually works. All that 'success' will bring us is another, even bigger bubble and another, even bigger crash. No point in actually trying to solve the problem.

Vocabulary: "Anonymizing" What Yahoo! will do with all the info it has on you, every 90 days, compared to the 9 months retention Google now holds your identifiable data.

One Stop Shop: Tuesday the Fed said it would use any and all possible tools to help the financial markets and the economy. It will stick its not-so-invisible hand into any market that is not performing to the Fed's satisfaction. It already is the market for corporate paper, mortgages, and mortgage backed securities, and is about to become the market for household and small business loans. Soon after will start the new Americanized Master-Visa Express credit card program.

Glory Days: Morgan Stanley made $3.3 billion betting against itself by buying back its own cheaply valued debt, and made $1.1 billion hedging its own debt. Only a capitalist could be proud of making money selling its own shroud. Even so, it lost $2.4 billion in the quarter.

Unsaddled: As the US economy drops, more and more horses are being abandoned by their wannabe owners who no longer can afford them.

Far, Far Away: As part of its effort to con Washington into a few billion in "loans", GM has stopped construction of the factory that would have made the engine for the Volt plug-in electric car and the fuel efficient engine for the Chevy Cruze.

Quoted w/o Comment: "I've abandoned free-market principles to save the free-market system." George W. Bush, Washington, D.C., Dec. 16, 2008

Ouroboros: Watching the rich eat their young is instructive. Seems that a lot greedy of rich folks kept making money with Bernie Madoff right up to the point they didn't have any money. Worse yet, they had pledged their apartments, condos, houses against loans to get more money to give to Madoff, or used their accounts with him as surety for other loans to buy apartments, condos and houses ...and then the walls came tumbling down.

Not Today, Not Tomorrow: Bush's mandated 36 billion gallons of biofuels by 2022 is not going to happen. That's the best news on the corn-based ethanol front in months.

SAR #8353

They just don't know what else to do.

Cry: Now that everything else has failed, Bernanke has opted for "quantitative easing," better known as printing money. This cannot work. The US relies on foreigners to buy our debt; with zero return and steadily increasing inflation robbing their principal, who's going to buy? If you print all the money you want, imports will slow or stop - which is fine for salad spinners, but is not going to work in the oil trade. The bond market may decide the fate of a currency, but those with the oil decide the fate of countries.

Symptoms: Feeling a tad queasy since FMOC endorsed Bernanke's quantitative easing? Are you concerned that this will soon get out of hand and turn into rampant inflation? Read Yves, she'll not make you feel better, just less alone.

1000 Words: News stories have been bragging that over 1,000 species have been discovered in the Greater Mekong during the past decade. Pictures, slideshow and video here.

They're Off! Joining Suzuki, Subaru has withdrawn from the world rally championships, Volvo, #2 truck-maker in the world, has temporarily halted production, Toyota is begging Nippon Steel for a 30% discount, Honda quit Formula 1 racing, GM is shutting down 3 assembly lines in Mexico. Chrysler closes everything for a month. Is that a checkered flag? Is it over yet?

Fun, Fun, Fun? China says that the US should not assume it can borrow its way out of the current financial crisis. Did Daddy just take the T-Bird away?

Rainbows: The two largest drivers of the American Consumer society, cars and houses, got way oversold in the run-up to the crash. The economy will not begin to revive until those cars are on the way to the junk yard and their owners have begun to forget how the housing & banking industry cleaned them out. Bernanke is going to lead the horse to water, but the horse remembers the bad taste from last time.

Q & A: Paul Krugman asks, "Do we need a middle class?" and answers "No." Just as you suspected.

Table Stakes: The Fed's spent the last 9 months trying to solve a crisis caused by too much bad debt by issuing more debt to the same actors. It hasn't worked. Now they are at the OTB window, doubling down to make up their gambling losses with one last long shot.

Maulled: At least two mall owners - General Growth Properties Inc. and Centro Properties Group -- have empty piggy banks. That's 850 malls across America looking for a savior this Christmas.

Contest: Now accepting suggestions for a replacement for 'Dominoes' in headlines and reports about the continuing collapse of the auto industry. 'Cascade' might work, at least for reports of the effect on suppliers of all the month-long shutdowns being announced.

Et Cetera: Madoof, AIG, Blagojevich... Nice to see tradition still means something in the US, as its economic and political escapades return to the warmly remembered norms of the Roaring 90's.

Point of No Return: Scientists report the Arctic is warming much faster than predicted by the IPCC, and think the temperature will soon reach a point beyond which recovery is no longer possible. Temperatures and events forecast to occur 10 or 15 years in the future are happening now.

Unthinkable: Why do we keep bailing out the banks? What do we use banks for? Not savings, not us. Not to get a loan, hardly ever. To process the credit cards, sure, and to hold the checking account. Provide public notary service once in a while, that's about it. Let 'em drown.

Overslight: To get a $120,000 mortgage takes the 5-page Uniform Residential Loan Application. To get $20,000,000,000 from Paulson's TARP takes a two page form, one page listing how much and the other telling where to send it.

Porn O'Graph: Assets in a sling, shot.

SAR #8352

Remember, the government doesn't actually have any of this money.

And Now, In the Center Ring: Having ridden its one trick pony to 0.25%, the Fed seems to have quickly jumped to its new solution: printing lots and lots of money. Don't worry about inflation, Ben's got A Plan.

Told You So! Arctic sea ice is shrinking faster than any of the IPCC's 19 climate models predict, and the rate of loss is accelerating. As cyrosphere scientist Dr. Julienne Strove of the US National Snow and Ice Data Center said, "Simply put, it's a case of we hate to say we told you so, but we did."

Selective Memory: November's CPI data is out, with a record 1.7% drop in prices. Of course that's including the drop in food and energy prices, which all summer long they told us didn't count.

Pulling the Plug: NASA satellite data shows that over 2 trillion tons of land ice in Greenland, Antarctica and Alaska have melted away in the last 5 years, half of it from Greenland. Greenland's share would fill up Chesapeake Bay eleven times over, and the melt there appears to be accelerating.

Smaller Government: When they set out to starve the beast, the Republicans forgot to take into consideration what would happen when the beast got very, very hungry.

Plantagenets: Princess Caroline , daughter of Camelot's slain John F. and niece of Edward, Duke of Massachusetts, is seeking to replace Baroness Hillary in the House of Lording it Over All. Lady Hillary, exiled King Bill's consort, has been elevated to duties as counselor to the New Court forming over the ashes of George II.

...Nor Any Drop to Drink: The GAO foresees water shortages affecting 36 states within the next 5 years. I foresee higher water bills.

Drilled Here, Now What: Looking for natural gas, a drilling rig in Indonesia hit mud, causing a mud volcano. Now, two and a half years later, mud continues to bubble up, spreading across fields and roads while the land sinks. The slump may reach a depth 140 meters.

Opposites Attract: When run by a bunch of kleptocrats, a capitalist society has turned out to be as flawed as communism. The end results will look very similar, too.

Gage: Even with the full-time efforts of the Secretary of the Treasury focused on its well being, Goldman Sachs was unable to avoid reporting a $2.3 billion loss for 4Q08. Think how bad things would have been without Uncle Hank's help.

Scenery: What did you think the economy foreseen by those who preached Peak Oil would look like, if not this?

Starting Point: The Center for Constitutional Rights, citing Congressional findings placing responsibility for the Pentagon's torture of captives squarely on Rumsfeld, is calling for his prosecution as a war criminal. Joining him should be Dick Cheney, who has publicly confessed to giving official sanction to waterboarding and other tortures. The Senate Armed Services Committee report also placed the responsibility squarely on George W. Bush, as should we all.

The Future Awaits: Germany, which is suffering a 1.75% decline in GDP this quarter, anticipates a 3% decline in GDP for 2009.

Words vs Deeds: The headline read "AIG sells $39.3B of mortgage-backed securities to Maiden Lane." If you didn't know that Maiden Lane was an alias of the NY Fed, you wouldn't have known that Uncle Sam paid AIG $20 billion for a pig in a poke.

Be Seeing the Light: After a decade of cornucopian predictions, the IEA has acknowledged that by 2020 global oil production will begin an inexorable decline.

Porn O'Graph: House that?

SAR #8351

Economies work only as long as people believe in them.

Ritual: It seems a foregone conclusion that the FOMC will cut the Fed Funds rate to .50%. It is also generally agreed it will not do any good.

Let's Pretend: In Greece all sides have agreed to pretend that the rioting has been about one case of police brutality. Seems more likely to be about the economic collapse spreading across the world. The crisis isn't over, and may be appearing soon in a neighborhood near you.

Fine Print: The 2007 IPCC report had this line: "Dynamic processes related to ice flow not included in present models but suggested by recent observations could increase the vulnerability of the ice sheets to warming, increasing future sea-level rise." Forget the 18 - 59 centimeters by 2100 cited in the report. The ice flow dynamics suggest a probability of ice sheet collapse. Splash.

The Beat Goes On: The greedy folks who pretended to believe Madoff was a wizard have found another one - Federal Judge Louis Stanton, who ruled that those who lost their ill-gotten gains to Madoff's Ponzi scheme can get their money back from the taxpayers.

Vocabulary: "Quantitative Easing" is econospeak for dumping massive amounts of cash into the system. It is inflationary, but Bernanke thinks he can catch that knife later on.

Presumption: Obama's economic team is reportedly developing guidelines to help the new administration deal with "the complete economic collapse of a large, unstable nation." This assumes two facts not in evidence: 1) that the US has the wherewithal to prevent the collapse of some large nation and 2) that the large nation will not be the US.

Economic Stimulus: The private companies who deliver supplies from Pakistan to NATO forces in Afghanistan survive only by paying the Taliban and other local bandits fees equal to about 20% of the value of the cargo for safe transit. Some hire the Taliban to ride escort on their trucks in order to secure safe passage. We may not be winning, but we are certainly spreading free enterprise.

Broken Carousel: One of the few things to keep the US tottering along the last few years has been the recycling of petrodollars into US Treasury Notes and the stock market. With oil at $40, there is going to be a noticeable drop in this cashflow. Oh, you'd already noticed?

Be Prepared: School districts that drew up plans to reduce the school week by a day to save on bus fuel are now looking at the same plans to reduce costs in the face of falling tax revenues.

Good News Among the Bad: After 25 disastrous years, the Washington Consensus (which was not so much a consensus as a program of organized theft for the owners of the World Bank and IMF) is being recognized as the failure it has nearly always been for those on the receiving end.

Simpleton Math: CA, FL, AR, NV and MI. There you have the worst of the mortgage crisis, right? Wrong. If you look at the number of foreclosures as a percentage of the number of mortgages, it's a different story. For example, Tennessee is far worse than California. Go see the chart.

Ah, The Light: The GOP killed the auto bailout not out of their unfettered hatred of unions, but because "Republicans needed to do something that would make them feel good about themselves."

SAR #8350

There is no statute of limitations on war crimes.

Remember When? When we were young and foolish, we were taught that the US had three branches of government and that the power of Congress was the power of the purse. I don't remembering the Mulligan Rule: “Because Congress failed to act, we [the Treasury] will stand ready to prevent an imminent failure”

Stuff Happens: Torture at Guantanamo, Abu Ghraib and lots of other places has been directly tracked back to Donald Rumsfeld and to "the White House." Tenet knew it was illegal and sought covering memos from his superiors, and when you are Director of the CIA, your superiors work in that big white building across the Potomac. But none of those directly implicated - Ashcroft, Gonzales, Rumsfeld, Rice and Cheney - recall Bush being present at any of the discussions. Wonder if indictment, arrest and trial would help their memory. If not there's always enhanced interrogation techniques.

Roosting Chickens: Many of the prominent names stung by Mr. Madoff knew what he was claiming was too good to be true, but they thought he was simply taking advantage of insider trading. They didn't consider the possibility that he was simply a crook, as were they.

Suspicions Confirmed: Years back my mom would have a sale in her little shop by taking a 25¢ item and marking it 3 for $1. Worked every time. She should have been a liquidator.

Speed Kills: The 2007 IPCC suggested the Arctic Ocean might become free of summer ice by 2050 under their 'worst-case' scenario. Try 2015 instead, as an optimistic estimate. This will affect everyone on the planet. Not just the ice-free ocean, but warming of the permafrost is occuring three times faster than predicted, extending as much as 1000 miles inland and 100 feet deep. A large and sudden methane release seems certain, and after that nothing will be.

3 Card Monte: Goldman Sachs forecasts oil will go for $30 a barrel in 1Q09. Previously they predicted it would be $62, and before that they were aiming for $100, just after they set their hearts on $200.

Where's Tonto? Barry Ritholz is right; the idea that Bernard Madoff at 70 was spry enough to do all the paper-hanging necessary to run a $17 billion Ponzi scheme all by himself for nearly 10 years is simply not creditable. He had to have quite a bit of very trusted help and the help would have to have known exactly what they were doing. Doesn't pass the smell test.

Party Line: AIG has been caught paying another 2,000 employees annual bonuses under the rubric "retention." The recipients of the bonuses, which were as much as equal to their annual salary, were ordered to keep the payments secret. But no help for GM, say the Republicans.

Vocabulary Update: 'Withdrawal', when used in connection with 'Iraq', means 'permanent occupation'. For example, that part of the text that requires US troops withdraw from Iraqi cities by June 30th doesn't apply to American soldiers, according to General Odierno. They're going to be "trainers and advisors". Reminds me of AIG's "retention bonuses."

Washing Hands: Christopher Cox says the credit collapse is just business as usual and that "financial markets, of course, are not perfect." As Chairman of the SEC his job was to work towards softening the blow, not simply advising us to relax and enjoy the inevitable.

Dollar A Gallon: Petroleum prices are far lower than the marginal drop in demand (as reported by both the EIA and the IEA) would support, so what's going on here? Investors - especially hedge funds - have been selling oil assets as quickly as they can. It's more a case of credit destruction than demand destruction.

New Speak: The GOP has redefined "workers" to mean only hourly unionized employees - at least when it comes to demanding wage cuts. Their version of a bailout did not demand any such sacrifice from management. Any questions, Class?

Rush In! We've reached the market bottom and a great bull market is about to begin. (CNBC told me). Don't worry about the failures beginning in the variable rate mortgage area, where the pay-option folks hang out. Yes, about three times as many of them are going to fail as there were subprimes - but that's not going to happen until 2010, 2011. Buy now. Buy anything, everything. Tell 'em Larry sent you.

All Together Now: Peak oil was the trigger, popping the unsustainable housing bubble which had given rise to mysterious credit derivatives destroying the economy while collapsing the stock markets and bringing down the last of US manufacturing. Meanwhile Paulson's friends steal billions while the government's budget debt reaches $1 trillion and people pay the Treasury to hold their money. Global Warming. Political corruption. Merry Christmas.

SAR #8348/Weekender

I blame it all on tube socks.

Herring, Red: The GOP nay-sayers insist that they had to vote "No" to teach the unions a lesson. The lesson is that being poor is their destiny and the destiny of 80% of the American population. The cost of labor in a Detroit car is about $800. UAW wages are only marginally higher than for those who work at Toyota (McConnell, R-KY), Nissan (Corker, R-TN) and Mercedes (Shelby, R Rep-AL). Protecting their constituents and free market capitalism while busting unions and promoting global economic disaster; it just doesn't get better than that.

Getting Real: Adjusted for inflation, US retail sales fell 10% in November (YoY); biggest drop on record.

Ultra Top Secret: Responding to Bloomberg's Freedom of Information request for details on $2 trillion in taxpayer money dispersed to financial institutions, the Fed said it would be completely transparent in providing what data it could as long as no names, amounts, terms or collateral involved were identified. Doing so, they claim, would be "a dangerous step" and the information must be kept secret in order to preserve confidence in the institutions being bailed out. If they told us more than that, they'd have to kill us.

Quoted: If you’re sleeping too well now, you can read the intelligence agencies’ prognosis for 2025 here. (PDF)

Rules of the Game: The GOP message to Detroit was really meant for Obama: Republicans continue to be the party of the über-rich with no interest in solving the nation's problems.

Splash Point: At a certain point, global warming is unstoppable. We - the whole damned bunch of us - appear determined to pass that point still certain that technology will save us. Once it gets warm enough to trigger huge releases of carbon dioxide and methane from not so-permafrost, the game is over. That point is 2°C warmer than today. That will come with CO2 concentrations of 450ppm. Few scientists believe that stopping at that point is possible.

The Big Cheese: Ferrari and Porsche don't seem to need bailouts yet, so the Italian government can afford to buy 100,000 wheels of Parmigiano Reggiano and give them to charity to help out their struggling cheesemakers.

Twofer: Right now the value of water in many parts of the US is all too apparent, as drought afflicts large portions of the country. These shortages are predicted to become commonplace in the next few years. OPEC suggest you wash your car and clothes in petroleum, which is cheaper these days than water; 6 cents a cup vs 89 cents a bottle.

Abandon All Hope... Britain's environment minister Hilary Benn proposes the world adopt a "food Kyoto" treaty to promote a global effort to increase food security for the near-billion now seriously at risk. After all, Kyoto worked so well in lowering CO2 emissions.

Victimology: It's easy to tick credit contraction's largest victims; they are countries that rely on customers in other countries to keep their economies going. China is #1, and 2009 will bring turmoil, especially if the latest projection of an actual decline in 4Q08 GDP is even half-close. Put Russia down as a close second, India third, just before Mexico.

Red Slippers: Mexico has pledged to cut its CO2 emissions by half by 2050. It did not reveal how this was to occur. Clicking heels has not proved effective for other countries.

Perception / Reality: The IEA says global oil demand will increase in 2009. The US EIA says oil demand has shrunk 50,000 bpd in 2008 and will shrink another 450,000 bpd in 2009. Meanwhile, Deutsche Bank sees oil falling to $30 on "weakening demand," while the US DOE reports an increase in gasoline demand in October. Flip a coin.

Trend Setters: The Center for Economic and Policy Research suggests that house prices must return to the 50 year trend line, and encouraged Fannie/Freddie to restrict the mortgages it buys to that range, sending out letters saying "we think you are paying too much for that house."

Porn O'Graph: Valuing the old homestead.

SAR #8347

It looks as though things are going to get really bad

before they get worse.

Dominoes: The GOP Senators have killed (a) the Big Three Bailout and (b) at least two of the Big Three (c) the real economy.

Imagine! US household debt decreased in 3Q08 for the first time on record. For a nation built on ever-expanding debt, this is more than a little head cold.

Two Front Teeth: Inbound freight at the Port of Long Beach was down 11% in November. The retailers suspected. Outbound was down 18%.

OPM: In October Bernard L. Madoff was the 23rd largest market maker on the NASDAQ, of which he had once been chairman. Today he is among the all time champion swindlers, having fiddled away at least $17 billion of his client's money. It is unclear whether he was running a Ponzi scheme for nearly a decade or had fallen into it to cover his abysmal failure as a trader.

Fortune: China's exports fell 2% in November, year to year, after growing over 20% a year for the past few years. In an economy that depends on exports for 40% of GDP and depends on double digit GDP growth to keep the country together, this is not good news. And if the Chinese economy craters, who will buy US debt? And at what price?

Waste Watchers: Even with the drop in food prices since last summer, prices for basic staples are nearly 30% above the average 2 years ago. The UN's FAO reports that 800 million people are "food insecure" - which means that they are frequently forced to skip meals. The World Bank warns that this is not confined to sub-Saharan Africa and is not temporary.

Henry Higgins: To the world, they are pirates. They may see themselves, with some justification, as the Somali Coast Guard.

States Rights: Ohio and 4 other states may soon exhaust the funds used to pay unemployment benefits. That will lead to either increased taxes on a declining tax base or cutting benefits to the unemployed. You have been following the problems in Greece, haven't you?

Montezuma's Revenge: Mexico says its increasing domestic oil consumption will result in an annual 5.3% decrease in exports even though it may increase overall production to 3 mbd by then. In other words, the US will have to find a replacement for its third largest supplier.

Late, Too Late, Way Too Late: Expect the worst. That's the word from climate scientists. Hansen's goal of 350 ppm has been passed, never to be seen again. The governments' goal of stopping CO2 concentrations at 450 ppm by 2050 is not possible. CO2 emissions are rising faster than anyone thought possible a few years ago; it is "improbable" that CO2 levels can be limited to 650 ppm. Any temperature rise over 2°C is "dangerous" and we've already risen 0.7°C and the stuff we've thrown into the air recently guarantees 0.5°C more, leaving but .8°C rise for from now to forever. By the way, 650ppm equals a 4°C rise which equals bad times. Very bad times.

Quick Stats: Unemployment up, a lot. GDP down, some more. Budget deficit way up. Government debt, ditto. Trade deficit rises. Cut this out and keep it handy so I don't have to keep posting these items.

Ben Bucks: If Bernanke gets to issue his own debt, independent of the US Treasury, what's to back it? Or would Bernankies be backed by the Treasury? What's the point if the Fed doesn't set different rates from the Treasury market? Sounds much like creating a distinct class of currency separate from the 'old' Federal Reserve Notes that are backed by the US Treasury. Is this the path to devaluation? Or debt repudiation?

We're Here To Help: Moody's estimates 10 million foreclosures over the next five years. A while back Congress passed a $300 billion foreclosure reduction/prevention program aimed at 'saving' 400,000 houses. Since the program started in October, fewer than 200 people have applied and a total of no loans have been modified. Score = PR 400,000, Reality 0.

SAR #8346

The government has bailed the free enterprise system

right out of existence.

Tea Leaves: The US DOE is predicting that the global demand for oil will fall through 2009 and that a sharp recovery from the bottom does not seem likely. In an economy that literally runs on oil, this is the same as saying the economic downturn will continue through 2009 with no sign of recovery.

Tumble Dry: This fall's decline in US clothing sales has caused the number of world-wide suppliers to the US garment market to shrink by 70%.

Temptation: Now that the Treasury is being paid to go into debt ($30 billion of T-bills, at 0% this week & 3 month notes where the government gets paid to hold onto your money), don't you worry that the US will view it - and spend it - as free money?

Fallen and Can't Get Up: The National Association of Realtors says that pending home sales are "in a stable range." Flat on the floor, comatose.

Expecting? The Russian press is reporting that US merchant vessels in the Black Sea are being insured against military risks until March of '09. Whether this anticipates armed conflict in the region or is the result of a general risk assessment for the area is unknown.

Lay That Burden Down: Consumers have carried the US economy as far as they can. A 1% drop in consumer spending is projected for 2009, the biggest drop since Pearl Harbor. By mid-year the economy will have been in recession for the longest time since the GD (we're forbidden to utter those words). Think it's going to rain?

Grim, Very Grim: In an attempt to get identification to match the person during the coming hard times, Indiana will no longer permit people to smile for their driver's license pictures.

Accidentally on Purpose: No small group could be so wrong so often by chance. What if the leadership of the Fed, Treasury and Goldman Sachs are not stupid bumblers? Consider for a moment that they rose to their positions through skill, knowledge and hard work. Suppose they know what they are doing, and are doing it on purpose. Hmm?

Well Enough: The price of oil is dropping due to lack of demand, they say. They also say the US is importing more oil than a year ago, and is doing so while the economy (and demand?) collapses.

Not Alone: It's not just Wall Street and Detroit; Korea's exports fell 20% last month, as did Taiwan's. Taiwan's exports to China fell 42%. Intra-Asian trade is in free-fall. Over 1,000 Japanese companies went under last month, and Japan's industrial output is expected to fall over 8% in this quarter.

Contest: The contestant submitting the best guess as to the date the Nigerian economy craters will win the usual accolades. Extra points for properly predicting the price of a barrel of oil on that date.

The Little Engine That Didn't: Freight traffic on US railroads was down 10% in November. If the manufacturers don't make stuff, ships don't have stuff to bring and there's no stuff to put on the trains. Or shelves.

Recidivists: Of US mortgages that have been modified to keep borrowers paying their mortgages, over half become delinquent within six months. Quick, tell Congress before we waste another trillion dollars. Of course there's the Corzine plan , where Fannie buys mortgages and doesn't foreclose even if you don't make payments. They could even buy MBS and CDOs from, say, Goldman Sachs - where Corzine once was chairman.

Bernanke & Company, Printers: Reports say the Treasury is too busy selling Treasuries to cover its own debt to keep shilling for the Fed. So the Fed is considering printing up and selling its own debt to finance its trillions in giveaways. They could call them Federal Reserve Notes....

Porn O'Graph: Shall we dance?

SAR #8345

Markets are self-correcting in the same way hunger is.

Terms: Recession and depression carry with them an expectation of recovery. Depression also suggests, based on prior experience, a slow long downward spiral. Two thoughts: Given the global interlock of credit and finance, won't this depression happen a lot faster? And the word in the series after recession and depression is collapse, which does not have the built in presumption of recovery.

Piggy Banking: If your kid sister stole nickels out of your piggy bank when you were a kid, you've already got experience with investing in 90-day Treasuries, where you can turn $1 into 97 cents in just 90 days.

It's A Gas: Demand for gasoline in the US is back to last June's levels. So much for that there demand destruction thingy.

Can You Hear Me Now? Scientists from Britain's Tyndall Center for Climate Change Research now say that the struggle to avoid dangerous climate change has been lost - forfeited by human inaction - and that the world must now start preparing for things to get "very, very bad." That's a technical term.

Janus: The cheap oil era is over; the era of oil as a hindrance to future economic growth has arrived.

First Among Equals : Bernanke has castrated the Federal Open Market Committee, which used to meet to make decisions about Fed actions. Now he summons the Fed's Regional Presidents to DC to learn what decisions had been made in their name. Bernanke's assumption of these "emergency war powers" was developed with the connivance of Geithner, who will soon, reassuringly, will be Secretary of the Treasury.

Cats in the Dark: According to AIG - which cannot pay bonuses under terms of the federal bailout - a retention bonus is not a bonus. Talk is talk, promises are promises, and bonuses are money.

Slow Learner: As a kid I didn't understand the Depression; the factories were still there, the men were ready to work, the ore was still ore... Now I understand: Moody’s expects corporations to begin defaulting on their obligations in great number. Thus no one will lend to them, so they will have to shut down the factories and lay off the workers. As a kid I didn't understand the financial system. Still don't.

Note to Self: After January 20th, refer to him as "Unindicted Conspirator"

How High Is Up? Analysts argue that OPEC must make "a large cut in production" to stabilize prices. One to two million barrels a day is recommended. That's as much as a 2% drop - gasp! Put it another way: The difference between $140 a barrel and $40 a barrel is 2% of daily production. Almost a rounding error, Kemosabi.

What's for Dinner? We have eaten our way through two-thirds of the world's reserve of grains in the last 5 years. The cupboard now has but 50 day's worth. The 1° C rise in global temperature guaranteed over the next 15 years will take a major bite out of food production in almost all of the planet's breadbaskets.

Humor: MIG Investments is predicting oil to trade in a range between $36 to $47 for the next five years. Six months ago you could find experts predicting $200 oil.

Earth, Wind, and Fire: The Chinese government and the United Nations both report there is a real threat of environmental collapse leading to economic collapse in China; China's air, water and soil are too degraded to support the growing Chinese economy. Elsewhere it was reported that China is to spend $20 billion building a rail system to haul more coal to its polluting power plants.

Growing Dow-n: Dow Chemical is "streamlining" by firing 5,000, closing 20 plants and "shedding high cost assets", like health plans and retirement funding. In addition, it is going to "idle" 180 plants and "cut" 6,000 contractors (?) globally.

Porn O'Graph: What goes up, goes up.

SAR #8344

Debit and credit only work when the lights are on.

Bulking Up: Banks and loan investors own about 900,000 foreclosed homes, up from 400,000 a year ago and building to an expected peak of 1.5 million in 2010. So banks, and Fannie Mae, are turning to 'bulk sales' in which as many as 800 houses are sold at once. The 800 went for $1.2 million - $1,500 apiece. Corruption here we come.

Where's The Beef: Obama's plan is to create 2.5 million construction jobs "quickly". The US is losing jobs at a rate of 6 million a year now, and the rate is accelerating.

All the News: The Chicago Tribune is pretty much a goner. The NYTimes is looking to sell its building to get operating funds. The Miami Herald is for sale. The Christian Science Monitor has given up print for the internet. Morning coffee won't take nearly so long.

Déjà Vu? In 1984 when the price of oil dropped 75%, the USSR lost over $20 billion a year from oil exports and in five years collapsed. Russia is as dependent on oil now as the USSR was then. Seconds? Is Saudi Arabia immune? Mexico, Iran...

Blowing Bubbles: Money is flooding into treasuries, lowering interest rates and thus the cost to Uncle Sam for financing and refinancing the ever growing debt. What happens when folks begin to suspect they can safely make 3.5, 4% or more on their money elsewhere? Tides go out, too.

Steady: Roubini predicts things will be much worse than expected in the coming months, as the dollar weakens even further. "The surprise is how bad the economy [will get]." At least there's some things you can still count on in an uncertain world.

Here's My Plan... The US National Intelligence Council's new report, "Global Trends 2025," includes this heartwarmer: "All current technologies are inadequate for replacing the traditional energy architecture on the scale needed, and new energy technologies probably will not be commercially viable and widespread by 2025." In other words, technology ain't gonna save us.

Committed: Citibank is helping Paulson get the credit markets moving again by increasing the rates on credit card balances and decreasing cardholders' credit limits, as they look after the welfare of their shareholders, particularly Saudi Prince Alwakeed.

Cool: Moscow set a new temperature record for December, 9.4°C (48.9°F) - the warmest on record for the entire month, and it was set at night.

Some Doctor, Some Cure: Loans, restructuring, an Auto Czar and a jar of magic will "save" the Big Three. If cutting production by half, firing two-thirds of the staff and shutting 30% of US dealerships, all with the loss of at least a million jobs, is "saving".

Bashful: Scientists are reluctant to admit that they haven't been scary enough, that things are much worse than they predicted. But they now say that to avoid runaway global warming the world must cut the use of fossil fuels 80% by 2030. No coal fired power plants. No natural gas fired power plants. No gasoline powered cars. No aircraft. Sailing ships, lots of sailing ships. Smile.

Trash Talk: In suburban Atlanta, Gwinnett County imposes a $500 fine for those who do not "source separate" trash for recycling. An excellent, precedent-setting first step.

Castor Oil: Economists are unanimous; we've got to kick the debt habit (even while Hank and Ben keep pushing it as a cure... ). Now they want the health warnings printed on the credit applications, after the society is hopelessly addicted. Cold turkey isn't going to be fun.

Porn O'Graph: Have we fallen and can't get up?

SAR #8343

Does our money have a 'use by' date on it?

Road Warriors: An attack on NATO's Portward Logistic Terminal near Peshwar left more than 30 dead and 106 vehicles destroyed including 62 Humvees on their transports. A simultaneous attack on the nearby Faisal depot destroyed an additional 60 vehicles destined for Afghanistan.

The Real Deal: If the BLS used the same parameters it used before wholesale political manipulation of the data set in, the November unemployment figure would have been 12.2%. But these days we don't count the 637,000 that gave up trying to find a job last month. Just being unemployed doesn't qualify you to be counted as unemployed.

Worse, then Worser: Nassim 'Black Swan' Taleb says doomster Roubini is an optimist. Taleb sees the economic system deteriorating much faster than the 5-6-7 years it took the Great Depression, and wreaking much, much worse devastation, worldwide.

Priorities: First the Republicans get to bad mouth the Unions and stomp them down a bit more, but after that Congress will find a way to bail out Cerberus the Big Three. Propping up Detroit into the spring will save Cerberus and its powerful friends most of their $2 billion investment in the auto business.

Egress, this way: Ben & Hank's excellent plan was to reinflate a bubble, any bubble. Looks like they've found it in 10 and 30 year Treasuries. Keep this in mind as you rush in, that reinflation will lead to inflation.

Failure: No deisel, no food, no electricity, no democracy and now a cholera epidemic. Quite simply, Zimbabwe is dying.

Doubting Thomas Paul: The economy is falling fast. Employment is disappearing at a rate of 6 million a year before the Big Three crater. Obama's infrastructure spending revival will take months and months to get the tent up and the chairs set. To quote Krugman, "I'm getting scared." That's economics speak for "Run!"

Car Czar: Congress will go along with giving away a pittance to Detroit, but along with the money they get a Czar to look over their shoulder. Can't trust those manufacturers with $30 billion without supervision like we could Wall Street with $350 billion.

Registered warrants: What California calls the IOUs it will use to pay bills once the money runs out. They got the idea from companies that issue little bonds in lieu of interest payments on their bigger bonds. Try paying your electric bill that way.

Don't Peek: Gun nuts can now carry loaded weapons in the National Parks so they can save themselves from packs of rabid of boy scouts. A parting gift to the NRA from George the Unindicted.

Spot Quiz: Will We Be Honest in Our Healthcare Reform Effort? The answer is no. Single payer is the only reform that makes sense and converting to a single payer system would wreck the economy. It'd be much worse than shutting down the Big Three. If you find this hard to understand, you are suffering from Attention to our Deficit Syndrome..

Crossroad: A SWAT team in full drag, semi-automatic weapons and all, kept the Stowers family immobilized on their living room couches for 9 hours while the team searched for an illicit food supply. Rationing? We don't need no stinking rationing. Nor warrants, apparently.

Difference: Fannie/Freddie's new policy that limits one person to mortgages on but four houses is seen as a treat to investors. I thought this bailout/foreclosure nonsense was directed at home-owners, not house-owners.

A Rose: Peggy Noonan's half right. She argues that "Homeland Security" has echoes of Nazism and has at best provided the illusion of security. She thinks it should be renamed. I think it should be required to behave constitutionally and then be disassembled and its day-care-for -adults program be reassigned to HHS.

Turf War: Obama's Treasury nominee Tim Geithner first goal for the improvement of the economy appears to be canning fellow Republican Sheila Bair, chief of the FDIC. Her crime? She shows indications of being concerned with the welfare of homeowners as opposed to mortgage owners - and behaving like a liberal Democrat won't be tolerated in the Obama administration.

Porn O'Graph: In the distance, hoofbeats...

SAR #8341 / Weekender

When WalMart is out of food, where will you get yours?

90 Pound Weakling: Retailers had the worst November 35 years, with double-digit decreases reported in many categories.

Bulking Down: The Baltic Dry Index continues to plunge and no turnaround is seen for the next 2 or 3 years. There are a large number of 'capesize' and 'very large ore carriers' to be delivered soon, to sit empty. Expect no finance, credit, nor liquidity in shipping markets for the next six months. You can rent a capesize for $1000 a day. Call some friends,plan a charter cruise before the shelves are empty.

Not Enough is Too Much: China seems to be getting restive, although whether their losses on US investments bothers them more than Paulson's prevarications is anybody's guess.

Deflation. Deflation is impossible in a fiat currency economy - so Uncle Milty taught. Yet it is happening. It is a circular phenomenon and becomes its own cause. A recovery requires the return of the customer with cash. Not credit, cash. Credit's another word for debt and there's no appetite for more of that. And won't be for a very long time.

Dis-assembly: Over 400,000 jobs were lost in September, 325,00 in September, half a million wandered off in November - that's 6 million a year. Unemployment reached 6.7% on the highly suspect U-3 scale. So far this year 1.9 million jobs hae been lost, 25% of them last month. Expect something similar under the tree.

Old Time Religion: A 2700-year-old marijuana stash has been found in the Gobi Desert. The archaeologist who discovered the bindle " believe there is little doubt as to why the cannabis was grown." Clever, those academics; will the owner please come forward.

Unwealthcome Effect: As house prices continue to fall, homeowners feel poorer - even if they have no intention of selling. Now US credit card companies are going cut credit availability by $2 trillion - 45%. This will lead to customers feeling even poorer, spending even less.

Depressing Redux: The wizards assure us that they've finally stumbled upon The Solution. Debt. Big wads of government debt. Don't mention that debt is what got us here or that quite a lot of money has already been borrowed and pledged and given away - all to little effect. Wizards get grumpy when caught naked.

Hell No, I Won't Go: No, not an anti-war protest, rather a Bush-appointed US Attornery has said she does not plan to resign just because a new president was elected. Republicans certainly are against change, especially now when jobs are hard to find.

Postponing the Inevitable: Treasury's plan to dictate a 4.5% mortgage rate tacitly acknowledges that the housing market in the US has been completely nationalized. The rate is too low to attract investors. The government will end up buying all that F/F debt and will run the printing presses to pay for the program; hundreds of billions to start, hundreds of billions more later. This won't help shrink US debt loads because it only applies only to new purchases. It won't help those already in trouble or those now underwater. And it does nothing about consumer spending, which is the real problem.

Are We In Denmark? That rotten smell is either the flatulence of cows and pigs, or the odor arising from the EPA's plan to charge farmers $175 a year for each cow. Hogs will go for $20 each. Good thing the price of food isn't counted towards the cost of living.

Porn O'Graph: Unemployment data from the Bunch of Lying Statisticians

SAR #8340

Ponzi schemes always end badly.

Bailing Wire: Detroit needs to cut its production by more than 50%, or all rescue plans are useless. That cut, in turn, will result in about 2.5 million pink slips, and Obama needs to come up with a plan to prevent all pensions and health benefits from breaking into unrecognizably small fragments.

Here Comes Santa Claws: Israel is reportedly drawing up plans to strike Iran alone if the US will not go along with them in an attack.

Hush! "We cannot even remotely afford that an auction of Italy’s government bonds goes uncovered…That would lead to a unique lack of liquidity for the payment of pensions and salaries. It would be like Argentina: That’s Maurizio Sacconi, the Italian Labour Minister on television. And the chart is pretty scarry, too.

Dun Notice: China wants the US to do something to solve its problems. “We hope the US side will take the necessary measures to stabilize the economy and financial markets as well as guarantee the safety of China’s assets and investments in the US.” They went on to suggest US over-consumption and total reliance on credit might be areas to examine.

Simple Science: Soot is darkening ice in the Arctic and speeding its melting. If the polluting factories are cleaned up to prevent this from happening, the resulting clear air will let more heat through the atmosphere, increasing global warming.

Talking Turkey: As mentioned before here, the political/cultural struggle playing out in Turkey is far more important than the theatrics in Georgia, Iraq, Syria and possibly Iran. The Army, long protectors of democracy, seem to be split into opposing camps, with neither supporting the government. The ruling Islamist party is accusing all opposition of being secret traitors of some sort. Study up, there will be an exam - bring your burqua.

Oxy Morons: The next time someone touts clean coal, remind them that there is not a single business nor a single house in the US powered by clean coal.

Barrel's Bottom: Big three are in such poor shape that even if the workers would work for free - no wages, no retirement, no healthcare - it would not help enough to matter. Put the blame on management, where it belongs. And quit wasting time; let's start figuring out what to do that makes sense and will actually work. Hint: Building cars is not the answer.

Rhetorical Question: Why is Single-Payer Health Reform Not Viable? (1) Blue Cross - Blue Shield (2) Humana (3) HCA (4) All those folks who own 1 thru 3. (5) All the folks who work at 1 thru 3 (6) All the people who work in hospitals and doctor's offices filling out paperwork for 1 thru 3. (7) Money. 8)All of the above,

Let's Privatize Social Security: Corporate pension funds keep falling - $300 billion in losses to date this year in the 1500 largest US corporations, leaving them only 80% funded. If they make up the shortfalls, it will come at the expense of profits, if any.

Stop & Go: Add this to the fad of cities farming out catching and fining those who run red lights: Chicago auctioned off its parking meters for the next 75 years for $1.157 billion. They'll spend half the money now and the rest "over the next few years". Scofflaws get sent to prison. A private prison. Private sidewalks are under consideration.

Here Bubble, Bubble: Europe's central bankers are following Bernanke closer and closer to a zero funds rate. It is a last-dich attempt to start some sort of re-inflation of the economy. Nothing else has worked. Japan tried this in the early 1990's, to no avail. It's still dragging the horse to water.

Porn O'graph: Shoe size... Bailout compared to lots of other big programs.

SAR #8339

Money is an accounting device we imagine is real.

Sudden Impact: How serious is the auto industry downturn? In November only 236,000 cars manufactured in the US were sold.

High and Dry: The Baltic Dry Index has now fallen 94% from its high. Global shipping is stopping. In our just-in-time world, if raw materials are not shipped, no finished goods will be shipped. How long until we get an Empty Shelves index?

Loophole: Last year for the nations of the world agreed to get together in December 2009 to negotiate on a set of ideas that could lead to a plan to reduce carbon emissions. Looks as though it may be delayed a bit and the details filled in later. Posthumously.

Balance Point: PIMCO's Bill Gross says the DOW will fall to 5,000 unless the Government does everything right. When's the last time the Government did "everything just right"? When's the last time Wall Street did anything right?

Blinders: US citizens are largely indifferent to the deaths caused by the US invasion of Iraq. More than 650,000, possibly over 1 million. Doesn't register. Just as we don't really think about babies in the third world dying of hunger. Lock the gate behind you.

Third Times a Charm: AIM - which needed over $100 billion from the taxpayer - now plans to re-negotiate their agreement with the Treasury. Again. Executives feel the terms (which left them running the place) were unfriendly to employees and shareholders.

Sailing Lesson: Moving water from one end of the boat to the other is not going to keep it from sinking.

Bush Whackers: The EPA caved in to administration wishes and has abolished the 1983 rule against coal companies dumping inconvenient mountaintops in local streams. Under Bush the EPA's rigid enforcement had limited the damage to just 535 miles of streams ruined in his first four years.

November Numbers: Nonfarm employment decreased 250,000 from October's level, which was 180,000 down from September. See the trend? Major US corporations announced over 180,000 layoffs in November. We've lost 1.5 million jobs this year. Just misplaced them...

Damned Destruction: The EIA Weekly Petroleum Data reports that over the last four weeks, crude oil imports have averaged nearly 10.0 million barrels per day, 17 thousand barrels per day below the same four-week period last year.

Watch Your Step: Scientists have found that global warming changes the molecular structure of organic matter in soil, speeding the release of CO2 to the atmosphere. Soils hold twice the amount of carbon as the atmosphere; a more rapid release will feedback more warmth that will lead to an even more rapid release of carbon. Melting permafrost raises the risk exponentially.

Lakeside Property: Folks keep reporting that they expect house prices to bounce back - some guess it'll take about six months. Yes, they know the economists say the decline won't bottom out until 2011 or so, but their house hasn't lost its value. They all live in Lake Woebegone.

Porn O'Graph: US debt as a percentage of GDP%.

SAR #8338

Who will buy the products ?

Too Much of a Good Thing: Venice is underwater.

Dasher: GM's November sales fell 41% from the previous year. Toyota was down 34%, Honda 32%, and Ford 31%. Many had expected better sales given the drop in gasoline prices and the large incentives offered.

Straw, Last: Goldman Sachs is expected to report a $2 billion loss in its current quarter. Goldman has not yet announced how much Paulson is going to give them, nor who they will buy with the government's money.

Don't Use That Word: Okay, so it's a recession, not a depression. If what's happened isn't a crash, why are stocks down 50%? Consumers can no longer consume; their earning have stagnated for years and they cannot afford the debt they already have. Anybody notice that the system isn't working?

Population Pop: One day population growth will stop. The question is not so much when as how awful will it be?

Pick-Up-Sticks: The downturn in auto sales hurts not only the auto makers, the dealers, the suppliers - it hurts state and local governments. Car sales are the single largest source of sales tax revenue for most state, county and local governments. No car sales, no tax revenue, etc.

Contrary By Nature: Conventional wisdom now favors the idea that there is a deflationary depression ahead, But if Ben and Hank get their way and the banks begin lending the Government's $280 billion they are sitting on, won't that be inflationary? Especially when they lend it at 10 to 1? Isn't money created by issuing debt? Wouldn't $2.5 trillion new debt, new money, be just a tad inflationary?

Fair's Fair: FEMA abandoned New Orleans and the Katrina coast after barely starting the clean-up. Now it tells Texas, sorry but we're out of here. Texas counties cannot fund the continuing cleanup - they can't match the 25% FEMA requires for road, drainage, building and other repairs.

Hank Gliding: Mortgage delinquencies have increased more than 50% from year-ago levels. Repeat after Hank: "The bailout is working." Click those heels.

Oily Days: In 2005 the world's average petroleum production (C&C - that is, oil from oil wells, not shale etc.) was 73.7 mbd. By August of 2008 the average rate was 74.1 mbd. Tens of billions of dollars spent by the oil industry over these three years has increased production by one-half of one percent, while the price went from $50 to $147 and back to $50. Demand may have decreased a little, but a small cut in OPEC production will take care of that. Price is all about the last barrel.

"Steep Decline" Defined: Paul Krugman ticks off the key points: US indicators are in steep decline, worse than any Japan had in the '90s. Spending is in free-fall. Unemployment is headed to 10%, maybe higher, meaningful employment recovery may not occur before 2011 and the recession will last until then, if not beyond.

Heck of a Job: UT's John Sealy Hospital in Galveston used to be one of the nations 200 Level One Trauma Centers. Now, three months after Hurricane Ike, Galveston's injured are air-lifted to Houston's Ben Taub. Sealy used to handle 60,000 emergencies and 3,000 trauma patients a year. Now the number is zero. Damage from September's storm surge has not been repaired; the cost will be over $700 million, and the hospital only had $100 million in insurance coverage. Falling tax revenues are causing the system to reduce staffing, too. Tell me again about progress in Iraq.

SAR #8337

A country that doesn’t make anything doesn’t need anything financed.

Whether Report: The US recession started in December 2007, according to the daring economists of the National Bureau of Economic Research. The NBER is a non-prophet organization.

Passe Comitatus: By 2011, NorthCom will have 20,000 combat veterans trained to "assist" state and local officials in maintaining order and putting down civil unrest if necessary. The force isn't needed to fight foreign terrorists - not even with the latest model flying carpets they cannot get significant numbers of jihadists here from over there - so there's no need to fight them in either place. Maybe Alexander Haig was in charge.

Stability or Not: Those with cash left are rushing into 3-month US Treasury bills, with a yield of 0.02%. It is seen as the ultimate safe-haven, to the point you have to pay the Treasury to hold onto your money. Throw a dart at the map and you'll hit recession, social unrest, rebellion, starvation and be happy to get your money back.

The Quote: "Poverty is spreading and may be re-clustering in suburbs, where a majority of America's metropolitan poor now live."

The Plan Hope: Bernanke and Paulson have settled on flooding the markets with liquidity and lowering interest rates to zero in an attempt to lead, trick, force the consumer into further debt. Japan has been doing this for nearly 20 years. Anybody check and see how it's worked out for them?

Do the Math: The essential step in stopping global warming, in adjusting to a post-peak energy realm, in avoiding continued mass starvation, in avoiding resource wars over water and food, in solving the problem of continuing growth on a limited planet - step the first is a discussion about how to achieve population control and a 50% reduction of human numbers. Anything else is just picking out wallpaper.

Contest: For the usual prize, name the first country Obama will bomb and explain how the administration will explain the difference between Clinton's bombing, Bush's bombing and Obama's bombing. (Note: Countries previous bombed are exempt.)

Chicken Feed: Pilgrim's Pride entered bankruptcy posting an $800 million 4Qo8 loss, including an operating loss of $250 million and a write-off of $500 million they over-paid for Gold Kist.

Lots... Construction spending on houses fell 41% in October over the previous year and was down 65% from the February 2006 peak. On the bright side, there are a lot of pickup trucks for sale.

Down On The Farm : Ammonia is essential to wheat production. Adequate ammonia leads to wheat that is 14% protein; underfertilized wheat is about 8% protein. This is important in those parts of the world where bread is a major foodstuff. Global wheat stocks at the end of the season have traditionally averaged about 70 pounds per person. For the last three years it has been about 40 pounds; the margin is thin.

In the Dakotas, farmers apply half their annual ammonia in the fall, half in the spring. This year the fall rate was closer to 10% because of higher costs and the absence of credit. Some cropland will go without fertilization in the spring of 2009 due to a lack of credit, much will go without because it simply will not be available. The national ammonia pipeline network has little spare capacity, so next spring - even if they can get the financing - Dakota farmers will not be able to make up for this fall's sparse fertilization: The capacity isn't available. Nor is the credit.

Are We There Yet? 10/26/05 Bernanke says there is no housing bubble. 2/12/08 Bernanke says housing to improve by end of 2008. Latest data show slowest housing sales in 20 years, median price continues to fall. At the current pace, housing will bottom by 2015.

Armageddon Insurance: Credit Default Swaps on 10-year US Treasuries passed 68.4 basis points on Monday, up 15% from Friday's close. Pretty impressive in that it's insurance that will pay off only if the dollar is worthless.

SAR #8336

In the 19th Century, consumption was a disease. Still is.

Truthiness Triumphs: NATO's Afghanistan command is consolidating the Public Affairs Office and the Psychological Operations Office, in order to prevent redundancies.

For the Shell of It: New studies show the ocean is becoming acidic 10 time faster than was predicted just a year or two ago. Alarmists are not being alarming enough.

Surf's Up: Delinquencies among prime rate mortgages are 45% above a year ago. Nationwide, 12 million mortgage holders owe more than their houses are worth.

Perspective: A deep recession will cause millions to lose their jobs, their savings, their homes. But a new report showing a 73% drop in oceanic zooplankton will cost hundreds of millions to starve. Zooplankton are food for crustaceans and fish, which are food for sea birds and mammals, and eventually for us, up here at the top of the food chain.

The Good, The Bad: Mortgage rates have fallen sharply; this is good for people with good credit. Our recent past suggests that it will be good for mortgage brokers, too, as they stuff the unqualified into FHA-guaranteed loans. The Ugly: Another subprime bubble in the works.

Diamonds are Carbon is Forever: Climate warming articles tend to end with 'by 2100', as if the next day all the carbon dioxide will be gone and the world will be full of rainbows and bunny rabbits. FYI: "The lifetime of fossil fuel CO2 in the atmosphere is a few centuries..." And 25% of what we put in the air tomorrow will last "essentially forever - far longer than human civilization so far."

Restrain Your Enthusiasm: Global demand for oil is expected to drop in 2008 and 2009, for the first time in a generation. Only 20,000 barrels a day, which works out to a 0.02% decline. Yes, two hundredths of one percent.

NIMBY: In a world-wide survey, 78% said they wanted their nation to do its fair share in reducing greenhouse gases. And over 50% of those folks thought someone else in their country should cut back. Those saying they, themselves, would alter their consumption patterns declined again this year. Teach your children well.

Assume: The Civil Engineer says, "assume this circle is a cow..." The economists counters, "assume everyone in the market acts rationally to maximize their benefits while companies always act to maximize profits and that all this is propelled by people acting independently while each has full and complete command of all the available information." Don't step in the stuff just outside the circle.

Absent Factor: Everyone keeps berating GM for not building cars people want. Actually, after the bailout or bankruptcy, what the auto industry needs is people who (a) can afford to buy a car and (b) actually need to do so.

Etiquette: Last summer the politicians and the pundits kept accusing Exxon and the other big oil companies of driving up the price of oil so they could make huge profits. Haven't heard much about the oil companies driving down the price of oil so they can take the tax losses, nor much in the way of "I was wrong," either.

Stirred, Not Shaken: When ice and global warming meet in conversation, it is nearly always polar ice - or Greenland's ice cap. Lately it's been concern over the breakup of the Wilkins Ice Shelf in Antarctica. But mountain glaciers are also losing mass at unprecedented rates - a couple of billion people depend on glaciers for their water. There can be no doubt that we are now past the tipping point for ice melt worldwide.

Location, Location, Location: Those of us in temperate climes read global warming predictions and shake our heads over the future. But in Kenya and Eritea and other African areas, the future is now and the predicions have come true. Watch the video (1:40).

Printer's Ink: Isn't capitalism grand? Don't you just love free markets? Oh, the whole thing was a Ponzi scheme? Which whole thing, the capitalism or the free markets?