Monday, November 30, 2009

SAR #9335

The disintegration of our society will surely bring dis-integration.

Retail Summary:  Shoppers up, shopping down.

When's Good For You?  If Congress had to pass a separate, specific tax to pay for the war in Afghanistan, do you really think they'd do so? Ditto, Iraq. What about paying for the wars by taxing Wall Street profits and speculator transactions? Nope, better keep taking the money away from our children.

Powerful Indicator:  US coal consumption to generate electricity is down 11% y/y. In that it takes electricity to make the economy go 'round, obviously the carousel has slowed no matter how much Wall Street pretends a recovery is underway.

Priorities:  1 in 4 mortgages is now under water, 1 in 3 Americans have either lost their job or live with someone who has, 1 in 4 children is on food stamps and one in 8 families are. We spent over a trillion dollars bailing out Wall Street and friends. It will cost about a million dollars a year to keep each soldier in Karzai's opium patch and after the 'surge' there will be over 70,000 of them.

Delamination:  In the end, it is not about the missed payments, nor even about the whole $59 billion, which isn't all that much on the world stage. It's that Dubai World's debt was presumably guaranteed by Dubai and the assumption was that someone with oil money – the UAE or Abu Dhabi was guaranteeing Dubai's backstopping of Dubai World's debt. How much commercial real estate debt has been established, consolidated, aggregated and securitized on the assumption that the layers upon layers were all going to hold?

Curtains: Bernanke warns that looking behind the curtain will spoil the magic and show the cupboard to be bare.

Global Lies Nation:  As Americans begin returning to work, many find they must accept 40% pay cuts. It's not so much a result of the credit/mortgage disaster, but that other disaster – shipping US production and jobs overseas into the global 'free market'. If you want a job in the globalized economy, you have to accept the going rate, which will be ever lower.

You Ain't Seen Nothin' Yet:  Scientists say the three-year drought in California could be just a foretaste of droughts that would last decades, perhaps centuries. It's happened before and may well again. But don't worry, it's just another of those climate change scare stories.

Patterns:  Not only do we live in 'interesting times' but we live in a unique time, where looting the past and mortgaging the future meet and end. Understanding this is prerequisite to understanding where we are and where we are going.

Bring Out Your Dead:  At least 56 things to worry about, now or soon.

Petro-dollars: The sky, it seems, is not the limit for oil prices, but $90 bucks a barrel may be and $150 most certainly is. The US economy cannot function if it must spend more than 5 or 6% of GDP on petroleum.

Thought for the Day: “Our wars, even though they’re destroying our economy, are making a lot of people rich.”

Porn O'Graph: Glows in the dark.

Saturday, November 28, 2009

SAR #9333/Weekender

Maybe some of that money should have been used to make actual products.

Flashback: Don't worry, the damage from the Dubai World default is “contained”. You know, like the sub-prime mortgage problem was.

Emphasis: I'm not as disturbed by the new US military prison in Afghanistan as I am by the pride the military takes in it. They brag that "vocational training" will be available at the facility. Another $60 million well spent.

Asked & Answered: Should there be a transaction tax on financial transactions? Yes, and everyone not on Wall Street's payroll agrees. Unfortunately, we're not the ones with any political power.

End of Time Shares? Will the high rises on the shores of the Persian Gulf last as long as the moai of Easter Island?

Strange: In a most unusual turn of events for the industrial-military complex, October's durable goods report reflected an 18% drop in defense-related equipment. And how, given its life expectancy, can that stuff be called durable?

Don't Tell Mom: Scientists say that “grubby children” are dirty, not unclean, and are perfectly fine for all the disapproving looks they get from my mother-in-law.

Quarantine? The scientists are losing. Climate change denialism is spreading faster than H1N1 and the only preventative is knowledge, which most see as an elitist plot. Evidence and reason have no more place in this discussion than in a real estate office, and the eventual outcomes will be similar.

Cashing In: First there was cash for clunkers, then cash for first time house buyers, then cash for all house buyers and coming 'round the clubhouse turn is 'Cash for Appliances'. I'm holding our 'til they start subsidizing single malts.

Sleigh Bills: Freight tonnage hauled by trucks in the US dropped by 5.2% y/y in October. Looks like Santa's sleigh might be a bit lighter this year.

Second Chances: Part of the Big Idea was to encourage lenders to modify mortgage terms and give people a chance to remain saddled with a house still declining in value. Out of 130,000 modifications made by Citi, after six months about 25% have defaulted again.

Majority Vote: A filibuster-proof 72% of Americans think that global warming is real and more than half think the US should do something about it. If only the odds in the US Senate were so good.

Porn O'Graph: The recent past as prologue.

Friday, November 27, 2009

SAR #9332

What exactly is a "consumer" and why are there still so many of them?

Terminology:  Try telling your credit card company that you are entering a “six-month standstill” in repaying your debts.   Dubai thought it might work on its $80 billion ...

Match'em Quiz:  Match the markets with their results: (a) CAC-40 (b) DJ 600 Stoxx (c) DAX (d) FTSE 100 (e) Hang Seng. with (1)-3.3%, (2) -3.2%, (3) -3.4% (4) -3.3% (5) –2.75%

Counting: If there were 416 “problem banks” in the second quarter and 552 at the end of the third quarter and 50 banks had failed in the meantime, how safe is your money in an FDIC bank?

Another Record Year! Atmospheric carbon dioxide continues to climb at rates that match scientists' worse-case scenarios, reaching levels not experienced in the last million years. We're living in a mad scientist's laboratory.

Hip-Bone connected to the.... Commercial Real Estate is “going sub-prime” and mortgage holders are likely to suffer big losses. Banks may write off $430 billion. Big life insurance companies have about $150 billion in “exposure” and some may have difficulty surviving an extended downturn, but so far their accountants “have not recognized material impairments or losses”. Wouldn't know a loss if it sat down beside them.

Good News Bad News: The good news is that scientists have succeeded in producing the polymers used for everyday plastics through bioengineering. The bad news is that scientists have succeeded....

Smoke: There's a reason everyone thinks there was collusion between the Treasury and AIG to conceal payments to Goldman Sachs.

Location, Location, Location: Over 5 million US houses are worth at least 20% less than the mortgage and 10.7 million are underwater to some degree. Nine percent of Americans are either in foreclosure or more than 90 days behind in their mortgage payments – a point from which foreclosure is all but a sure thing.

Official Talent: The Census Bureau employee found dead, hands and feet tied with duct tape, mouth sealed with same, rope around neck and “FED” written (bottom up... ) on his chest has been determined to have committed suicide.

And Then the Rains Came: By the end of 2010 the US has to roll over $3 trillion in existing debt plus finance another $2 trillion in new debt. Sucking that much money out of the market will dampen things, if they can actually do it.

Just Sign Here:  Another set of studies has shown that Americans are financially illiterate, a foregone conclusion in the land of the otherwise illiterate and innumerate. Go figure.

Garden Party: China says it will not sacrifice its growth just to reduce CO2 emissions. “Can't please everyone, gotta please yourself.”

Oil and Economics: At $90 a barrel, 4.5% of the global economy goes to pay for oil. Any higher price will destroy the economy and thus destroy demand. “So we do have a ceiling on how much expensive alternative fuel we can put into the market.” said Saudi Aramco's former VP of production, who apparently isn't deeply invested in Iowa corn.

Asked & Answered: Is global warming unstoppable? No, if we're lucky a major collapse of the world's economy might save us. But a 6ºC rise by 2100 seems possible and a 4ºC rise probable.

Plot Sketch: A group of well paid and highly trained American assassins, working out of a safe house in Karachi, covertly kidnap, torture and kill terrorists, saving the world from forces that would kidnap, torture and kill Americans in revenge.

The Sequel: Citi fears that investors haven't learned anything in the last two years and the rampant speculation in basic commodities will turn out badly. Badly, as in “Sub-Prime II, the Sequel”.

Strange Idea: Let Afghans solve Afghan problems. It'll never fly, there's no profit in that approach.

Socialism:   The next time someone bitches that the government spends 43% of its money on Social Security, Medicare, and Medicaid, remind them that 34% of the government's money comes from dedicated Social Security and Medicaid taxes and only 9% of general tax revenue monies go to these programs.

Porn O'Graph:   Money vs pretense.

Wednesday, November 25, 2009

SAR #9330

We're Americans, history doesn't apply to us.

Tattle Tale: The IMF says that banks around the world and up and down Wall Street are hiding some $1.5 trillion in toxic debts that remain on their balance sheets. The unrealized losses on these bad loans “ threaten the solvency of many institutions.” The banking systems of advanced economies “remain undercapitalized”.

Just Great: Australia's Great Barrier Reef has only a 50/50 chance of surviving if global CO2 emissions are not cut by 25% by 2020. Book your trip now.

Party On, Dude: There's a very strong argument that high oil prices in 2008 were the trigger that popped the housing debt bubble. Yet Big Oil and its fellow travelers -cars, suburbia, finance, media (advertising) and politicians want us to party on, even though many know there are huge problems ahead as oil production declines. Despite prompting since 1981, we have no plan for this disaster. Once petroleum becomes scarce, today's admirable 'just in time' efficiency relying on global transportation will become unworkable.

Asked and Unanswered: How much would you pay to save the world?

Talking Their Book? Fitch Ratings downgraded Mexico's foreign debt to BBB in the shadow of its collapsing petroleum income. Goldman Sachs said this was “unnecessary roughness,” because Mexico was going to pull a rabbit out of the sombrero by increasing taxes. What Mexico has to tax other than petroleum and illegal drugs wasn't specified.

Overused: The continuing economic slide has made the term “worse than expected” expected. And rightly so in the case of the S&P/Case-Shiller house price index. Down 9.4% y/y.

Water is Wet: Opponents of health care reform keep harping about the increase in costs. Of course it will cost more – it will insure about 35 million more people, many of whom cannot qualify for private insurance because they are sick or likely to get sick. For-profit insurance companies long ago figured out they wanted nothing to do with actual sick people.

Always Wrong: Now that nearly everyone has become bullish, or pretends to be, a serious downturn is nearly guaranteed.

The Story Thus Far: If all the world's population used as much of the planet's resources as Americans do, we would need five more Earths. Luckily the huddled masses seem content to wait their turn. So we keep telling ourselves.

Tea Leaves: Stocks and commodities continue to rise as the dollar falls on the perception that record low interest rates will last until “late 2010, perhaps later in terms of 2011,” encouraging the bubble in assets to continue to move higher. Eventually the stock rally will grind to a halt as the global recovery slows, spurring demand for the perceived safety of the dollar. A minority of forecasters, those rated "most accurate" by Bloomberg, see the dollar continuing to fall through 2010, reaching $1.58 to $1.60 per euro, while the majority (of less accurate forecasters, presumably) expect the dollar to gain against the euro. Bond investors (with unemployment above 10 percent and housing taking another downturn) happily lodge their money with the government at zero interest to preserve their capital. Stock investors (with greed and hope in their briefcases) feel continued low borrowing costs and the $12 trillion in stimulus will inflate earnings and chase up stock prices.

Brother Can You Spare a Kidney: In order to get by during this Great Recession people are selling what they have – themselves. Hair, plasma, sperm, eggs, spare parts...

The List: The national debt is $12 trillion. We've promised ourselves about $100 trillion in benefits we've got no chance of paying. The global temperature's going up 4 to 6ºC, the glaciers are melting and the oceans rising. Swine flu is mutating. Cheap oil is gone and the bottom of the barrel is in sight. What's to be thankful for? Besides cranberry jelly from cans.

Porn O'Graph: Build them & they'll stand empty.

Tuesday, November 24, 2009

SAR #9329

How does taking money from my children and giving it to my neighbor's banker help anyone but the banker?

Short Form: Sales of existing houses were up 10% in October, m/m. At a seasonally adjusted rate of 6.1 million units is far above the long term norm of 4.5 to 5 million houses, and a reflection of purchases prompted by tax credits. Exciting, but essentially just a measure of new debt, not economic activity. These houses already existed and trading ownership does little to stimulate the economy.

Suck It Up: “The bad news on jobs is no longer a surprise to investors and history has shown that past jobless recoveries were dealt with fine by most major asset classes.” They were not, however dealt with quite so finely by the unemployed.

Balance of Trade: China gets 10% GDP growth, America gets 10% unemployment.

Science: You should not “believe” in global climate change based on newspaper reports. Read some books, plural, books that have footnotes and explanations of where the data came from and how it fits with other research and what conclusions can be supported by the data. Then you can intelligently form an opinion. You are not allowed to “not believe in” global climate change in bulk. The data behind the current theory is published in literally tens of thousands of peer-reviewed public documents: research reports, studies, letters, public conferences. You are allowed to take each and every one of these tens of thousands of data sets and replicate the research and show that it was wrong, in error, or even fudged. And then you publish your report – if it can stand peer review. Then you take up the next data set and try again. You disprove science by doing better science, not stealing emails.

Books Report: As those of us who stop in to read their magazines and drink their coffee have known since early summer, Borders is on the verge of bankruptcy. I've got $19.86 left on my gift card, so I'll stop in later this week.

Bad Movie: A killer fungus is attacking and killing over 350 amphibian species. The WHO suggests border agents screen arriving amphibians for signs of the disease. I am not as upset as I should be.

Follow Me, Men: The leaders of America's corporations have been dumping their stock in their own companies faster and faster as the Dow rises. Last week they dumped $1.39 billion but bought only $166 million of their own company's stock. Raising funds for their holiday shopping, y'think?

Spot Quiz: Why is the dollar worthless. a) There are too many of them. b) Promises, promises. c) It is backed by Fannie and Freddie and Ginnie Mae's bonds which are backed by subsidized housing and delinquent mortgages.

The Nays Have It: By a vote of 31 to 6 the Australian Senate has rejected Peak Oil. Guess they didn't see Road Warrior.

Phantom of the Markets: Dr. Shiller, he of the Animal Spirits, now wonders if the equity market recovery is all in our heads, a self-fulfilling fantasy. Perhaps; it certainly is a fantasy of some kind.

Bailouts Are US: For the third time in 16 years the US airline industry needs to be “saved” after racking up $58.5 billion in losses by following a series of obviously flawed business plans. It might help if they could talk TSA into easing off a bit on the harassment.

Hands-Off: While the Feds have been giving money to Wall Street (purportedly to create jobs) and are talking about a new stimulus to more directly do so, State governments – for lack of the money Washington gave Wall Street – are laying off ever more people.

Street Smart: The IMF says that the public in most advanced economies would not accept additional bailouts of the banks and that any such attempt “would threaten democracy.”

Blowing Bubbles: The Fed's zero-interest zero-risk money dispenser allows banks to improve their balance sheets on the cheap and forces investors into risky assets. The direct (but inverse) correlation between the dollar and equities suggests banks, funds and investors are borrowing cheap dollars and chasing assets. But a bubble's a bubble and we really need a bubble

Porn O'Graph: The globe's got a fever.

Monday, November 23, 2009

SAR #9328

There still isn't an actual plan to put Americans back to work.

Fun Fun Fun: In the first quarter of next year the Fed plans to stop buying Fannie, Freddie, and Ginnie Mae's trash. Today banks only write mortgage loans they can immediately sell to a government agency. So what happens when Daddy takes the T-bird away? Rates go up a half percent, immediately.

Plot Thickeners: A mutated form of the H1N1 virus has killed over 400 people in Ukraine. A cluster of Tamiflu-resistant H1N1 flu cases have been identified in North Carolina, and another virulent strain has shown up in Norway.

Just Sayin': In 2002 oil was priced at $26 a barrel and Saudi Arabia produced just over 7 million barrels a day. As the price rose to about $57 a bbl in 2005, production rose to just shy of 9.5 mbd. Since then oil climbed to $100 and then to $150 a bbl by August 2008 – and the Saudi's kept producing less than 9.5 mbd. It looks as though in only one of the last 5 years have they pumped more than they did in 2005. Interesting, no?

Gospel Truth: His Holiness extends a warm welcome to Anglicans who find their church's tolerance of gays unacceptable, says they'll fit right in. The haters, not the gays.

Promises, Promises: The commercial real estate market is headed for a collapse that will have “catastrophic effects” on the economy. Some $1.3 trillion in CRE debt is up for refinancing and about half of it will not be renewed. What are the banks going to do with all those empty offices, factories, malls - open card shops and second-hand clothing stores?

Good Old Days: A 2005 Census Bureau survey found that more than 20% of Americans could not meet their basic needs without help from family or outside agencies. While 99% of the nations households had refrigerators, a goodly number didn't have anything to put in them. And that was before the good times ended.

Shaken, not Stirred: The East Antarctic Ice Sheet, once thought to be stable, is losing 57 billion tons of ice a year to global warming, raising fears that global sea levels will rise faster than previously predicted as Antarctica “may start to lose more ice than Greenland within a few years," said a University of Texas scientist in an email that hasn't been stolen yet.

More Magic Numbers: The SEC has decided that “Proved Oil Reserves” don't have to be proven at all, merely assumed to be recoverable by “reliable technology” and undisclosed “trade secrets”. Makes wishful thinking respectable.

Freedom of Deceit: Ohio has joined the crowd in suing Moody's, S&P and Fitch for giving their clients' crappy bonds AAA ratings. The agencies claim the ratings are a form of free speech. But if they charge for the speech – and they do – how is it free?

Neighbor Hood Watch: The US, having been kicked out of its big Manta airbase in Ecuador and having failed to overthrow Chavez, is attempting to establish “crushing military superiority with atomic and conventional weapons” to control the oil-rich areas of South America. Seven new bases in Columbia will help strengthen US presence in South America “where security and stability is under constant threat from... anti-US governments". The Pentagon seems intent on rejecting the democratically expressed wishes of the people in favor of continued access to the people's oil. Again.

Quoted: In 2005, the DOE reported “that even if a crash program were to be implemented a decade before the fact, a production peak would still severely disrupt the global economy. Peak oil is a bigger issue than health care, than federal budget deficits. … There are no quick fixes.”

Porn O'Banking: Bank reserves have grown fat off TARP and similar government gifts they were supposed to use to make loans to spur the nation's economy and build jobs. What, besides giving themselves bonuses, are they doing with the money? As Lincoln asked Meade about the Army, perhaps we could ask for the money back “as they're not using it.”

Roadsign: Has the predictive ability of 'the markets' eroded as financial transactions morphed from old fashioned investing (buy and hold, asset allocation, concern for dividends and profits, etc) to today's orgy of speculative day trading? How else to explain today's Dow, given the real economy and its real outlook?

Porn O'Graph: Making money the old fashioned way, actually earning it.

Saturday, November 21, 2009

SAR #9326/Weekender

It's not fraud until they get caught.

Follow Me! Japan, after twenty years of deflation and stagflation is entering another deflationary 'dip'. It's of more than academic interest, for that's the road we're headed down, too.

Does US need a second stimulus to create jobs?: Krugman & Co. are on one side, the deficit hawks and inflation fighters on the other side of a seriously spurious argument over the wrong question. The question should be “Could a second stimulus create jobs?” And the answer is no, not real jobs, not lasting jobs. Globalization has put many (most?) jobs up for bid on the global labor market, where the average wage is closer to $7 a day than $7 an hour. Until something changes – protectionism or peak oil might do the trick – unskilled and low-skill industrial jobs and many administrative tasks will continue their trek overseas. 'Shovel ready' is right – ditch digging is one of the few jobs that can't be outsourced. Yet. That does not mean that the idea of putting “the far majority of the unemployed workers to work at a minimum wage job to work on community and environmental care projects” is a bad idea. It might postpone civil unrest.

Ugly American: Asian governments are threatening (and taking) capital controls as a way of protecting their economies from an invasion of cheap US dollars – the 'carry trade'.

The Check, Please: US policies have driven short-term interest rates to zero and below. This creates free money for the banks, permits a massive carry-trade of speculation against the dollar and puts pressure on investors to abandon the safety of Treasuries and chase riskier assets higher. This is not an accident, it is a policy goal. Easy money and cheap debt paved the garden path and apparently the same paving stones are now supposed to lead us to the oasis.

Old News: As reported here earlier, a whole chorus from Bloomberg to Goldman Sachs to the NY Times has suddenly discovered that housing is not in recovery after all. Maybe the bottles were cleverly hidden.

Game, Set, and Match: The Green Revolution of 40 years ago worked – we've managed to put off starvation while doubling the world's population. Now easily twice as many will succumb to famine, pestilence, war and the collapse of societies. Food production depends on petroleum, food distribution depends on petroleum, agriculture depends on a rather familiar environment. We're about lose the fuel to grow, process and distribute foodstuffs just as the climate changes. All without a plan. And, yes, agriculture depends on natural gas for fertilizer and petroleum to administer it, not to mention the finite amounts of phosphorus... Remember, if you have a home, job, transportation, hot showers, and food every day you are among the lucky 15% that the rest of the world envies.

Peak Predictions: In 2004 the IEA predicted oil production would be 123 mbd in 2030. It dropped to 120 mbd in 2005, 116 mbd in 2007, 106mbd last year and 105 mbd now. The IEA (and the DOE's EIA) have for years adjusted their predictions to match predicted needs – what my mother called wishful thinking.

The Bernanke Bet: Morgan Stanley says that if you are holding 10-year Treasuries you are an incredible optimist, betting that the porridge will not be too hot (inflation) nor too cold (deflation) but just right. Which is having a lot of faith in the ability of those who (a) didn't see this coming, (b) didn't stop it from arriving and (c) haven't figured out how to get out of this mess - doing everything right, several years in a row.

Can't Buy Happiness: Turns out money can increase your happiness, but it's 32 times cheaper to buy therapy. Buying love is still frowned upon.

Memorize: “At some point, American workers will rebel. US unemployment is already over 17.5%. Some 332,000 properties were foreclosed in October alone. More Americans have lost their homes this year than during the entire decade of the Great Depression. A backlog of 7 million homes is awaiting likely seizure by lenders. If you are not paying attention to this political time-bomb, perhaps you should.”

Porn O'Graph: Are you sure sub-prime mortgages did it?

Friday, November 20, 2009

SAR #9325

The dollar hasn't fallen, it's retraced its gains. - Mr. Bernanke.

Non-News News: This week's unemployment data is essentially unchanged from last week and the week before and the week before – initial claims are about half a million, total drawing unemployment is still about 5.5 million. It ain't getting better, it's stopped getting worse, and you wouldn't mistake it for a recovery. Come January, as a million former consumers run out of benefits, bankers will be getting over $30 billion in bonuses.

Coal for the Little Boys and Girls? Yields on January and February T-Bills are turned negative – what are folks expecting in the Christmas stockings that is so scary that they'll pay Uncle Sam to hold onto their money for them?

On Needling the Rich: Six reasons, with comments: They have more money so they pay more taxes. They indulge in philanthropy to assuage their guilt and lower their taxes. They give money to colleges to get buildings named after them and to lower their taxes. They spend money on luxuries, which creates jobs – but how many servants does one need? They have the money to buy up good ideas from inventive poor, it's called vulture venture capitalism. And they have the money because they are smart and you are not and money is the only true measure of smartness in America. And lastly, God really wants them to be rich (and you to be poor). But the best use of the rich is as a target for satire.

More is not Better: Mortgage delinquencies continue to rise, reaching 9.64% of all mortgages in the third quarter. That's 4.5 million more of us on the road to foreclosure, and one in seven mortgages – 14% - are now either in foreclosure or delinquent.

Moderation: I should get credit for my restraint in not mentioning a study showing that my daily scotch lowers my risk of heart disease.

Remember: The “worst financial crisis in generations” happened after “eight years of basic neglect of basic public goods, in health care, in education, in public infrastructure, in how we use energy.” So said Mr. Geithner to a forgetful GOP Representative from Texas.

Just So Stories: Société Générale has advised clients to prepare for a possible "global economic collapse" in the next 2 years. Government rescues of the banks cured nothing, simply converted private liabilities into sovereign debt, which “looks entirely unsustainable. We have reached a point of no return for government debt.” Private debt is too high, too. If the US could maintain a 7% savings rate and use all of that 'savings' to pay down private debt, it would take a decade to reduce the debt to safe and sane levels. For the graphic tour, click here.

Predisposed: Some people are more empathetic than others because of their genetic heritage. The rest of us learn it socially. Or don't.

Pick A Number: Yesterday's report suggested house prices had a long way yet to fall to reach the long term trend line. Today another report says there's only a little way left to fall to reach the trend. The question seems to be which trend line (nominal, inflation adjusted), which prices (mean, median), and how long long-term is (since 1970, 1980, or 1990). Statistics.

The Good, The Bad, & The Ugly: Data provided by Celsias, “a platform for corporate social responsibility”, show that during 2008 US CO2 emissions fell by 3% and that they are on course to fall 9% more this year. According to them, "carbon emissions are declining and will likely continue to do so.” Meanwhile, a report in Nature Geoscience reported that CO2 emissions have increased 29% since 2000, and that these emissions continue to outstrip the ability of the earth's natural carbon sinks to absorb them. Coal has surpassed petroleum as a source of CO2, and developing countries now emit more than the developed countries. Global temperatures will increase by 6C if urgent steps to control CO2 emissions are not taken soon.

How long is a yardstick? The accepted standard for determining age via DNA testing have been underestimating the age of evolutionary events by 200% to 600%. Biologic events thought to have happened 100,000 years ago probably happened at least 200,000 and perhaps 600,000 years ago.

Porn O'Graph: CERA says we're going to discover our way around peak oil; this chart says it ain't happening.

Thursday, November 19, 2009

SAR #9324

The 'too big to fail' have become the 'too connected to care'.

Michael Panzner.

Good News: Builders built houses at an annual rate of 529,000 – 11% down from September. That's just as well, we've got enough empty houses sitting around (14 million) as it is, because people didn't buy new houses in 3Q - they were waiting to see if the Government was going to bribe them. Building permits, a sign of future construction, also decreased. Mortgage applications also fell – to a 12-year low.

Costly Living: Core inflation (CPI) rose 0.2% in October, mostly because of a 3.4% rise in the price of used cars – thanks to the cash-for-crushable-clunkers program.

Piggy Banking: The CBO assures us that deficits will add about $13 trillion to the current $12 trillion National Debt by 2019. If interest rates are about 5% then, the interest on the national debt will be $1.25 trillion a year. Hard to get out of debt when you can't pay the vig.

Playing the Odds: A large majority of the world's scientists are at least 95% certain that we are well on our way to irreversible climate change. That's like 9 out of 10 inspectors telling you your house is likely to burn down. You'd either move or take out fire insurance. We should act now to curtail climate change as much as possible as soon as possible simply because it's flat stupid not to.

Sisyphus: To put the task of rebuilding employment back to 'normal' levels (5.5% unemployment) in perspective, first note that 1999 was the last year we added 250,000 jobs a month for a whole year. Then note that we've lost 300,000 jobs since then, we have 15.7 million unemployed, and lost 8 million jobs in the current recession. And we add about 125,000 workers to the labor force each month. To regain “normal” in 5 years means that every month between now and then we have to create about 300,000 jobs.

The Price of Stupidity: Banks are quite happy to let you withdraw $5 from the ATM for a $2 fee. Their hope is that you are overdrawn – then they can tack on a $35 fee for the convenience. I'd get upset at their greed, but I'm equally upset that anyone would use an ATM when they don't have any money in the bank.

Non-cents: Essay Contest: Given that European investors in US Treasury Notes have lost 17.5% of their investment since March of this year, please explain why anyone outside the US is still buying them. For extra points, noting that US investors have lost nearly 3% on the same investment, explain why they're still holding on. Usual prizes.

Money Quote: “[The US] is utterly dependent upon unlimited supplies of relatively cheap gasoline. Our population is dispersed and the private automobile is essential to personal existence...”

You Promised Me! Most Americans think there was a housing crash, they just think it happened somewhere else, to someone else. More than half of us think our house has either retained its value or increased in price – even though 72% of all US houses have lost value over the last year.

Gradual is as Gradual Does: We seem to have our future pinned on a very gradual slip into something warmer. And we'll adopt to the warmer climate as it drifts in. Except climate change is not always so slow and gentle. 12,800 years ago it took just 6 months for Europe to go from balmy to Ice Age – thanks to a sudden slowdown in the Gulf Stream. It took 1300 years for things to go back to “normal”. Don't put all the eggs in the “we've got decades” basket.

Porn O'Graph: Don't pay attention to the curve behind the curtain.

Wednesday, November 18, 2009

SAR #9323

What part of being taxed to support Wall Street bothers you?

Hound of the Baskervilles: Our intrepid TARP watchdog has belatedly discovered that not all of the billions the ex-Goldman boys washed through AIG went to Goldman. But even counterparties who agreed to settle for less were forced to accept 100% reimbursement.

Pan/Fire: Electric cars are not the magic elixir they might seem. The increased demand for electricity would be met by burning more coal, pouring more CO2 into the atmosphere. Still no free lunch.

Priorities: At the end of the Bush Administration 49 million Americans were 'hungry' and 17 million had 'low food security' – which means they were not sure where tomorrow's supper was coming from. Since then things have gotten worse – U6 unemployment is over 17% and getting worse, not better, and a record 36.5 million people were receiving food stamps in August. Aren't you glad we bailed out Wall Street? Aren't you delighted that they're going to extend TARP into next year, to keep helping out the un-needy?

Please Explain: GM reported a 3Q loss of $1.15 billion and announced it would soon begin repaying the bailout money it got. The check's in the mail?

Old Cape Croaker: The warming waters of the North Atlantic are inviting croker, hake and summer flounder to replace cod as New England's signature catch. Renaming the Cape may take a while.

Ahhhh, Now I Get It: The GOP held up passing the extended unemployment benefit legislation by a month – but that month insures that a lot of people get screwed over while the Republicans can claim they (eventually) voted for the extension. The year-end filing deadline will prevent anyone from getting the final six weeks of the extension – there's just not 20 weeks left in the year! The GOP teaching point is that the unemployed have to suffer or the work ethic will.

Slowing Down: At the end of September, 6.25% of US mortgages were at least 60 days delinquent. That's the first step to foreclosure, and it is up 58% y/y and up 7.6% from the previous quarter – which is an improvement, so things are going to hell, but slower.

Ground Rules: If the recession is over and retail sales are up, how come the sales taxes collected on these improving retail sales are still dropping?

Better Luck Next Planet: There is not enough time now left – after successful US foot dragging – to reach a binding climate treaty in Copenhagen in December. So an agreement has been reached to meet in a year or so to see if an agreement can be reached to schedule another time and place to sit down and put off doing anything about global warming.

Reminder: Away – that magical place where unwanted plastic crap goes – is a floating garbage heap twice the size of Texas lurking about 1,000 miles northeast of Hawaii.

Oily Days: The media is in full cry once again, baying at Peak Oil as though it were well treed and no longer a threat. The uproar started with the IEA's 2009 report and the claim that the report was fictionalized to keep the US and Big Oil (but I repeat myself) happy. Daniel Yergin, a consultant to big oil famous for his errant predictions, assures us there will be no peak before 2030 and no decline even after that. He then makes fun of Ken Deffeye , who correctly predicted production of crude oil would peak in 2005. (He joked it would happen on Thanksgiving.... ). Crude oil production (just crude oil, not stuff made out of corn, condensed out of natural gas or squeezed out of sand) peaked in 2005. In 2006, 7, and 8 crude output was below that rate. Some say all we have to do is throw more money at the problem and more oil will be found and/or retrieved. These same people say there is no hunger in the world, the food's in the wrong place and the folks that need it can't afford it. Same with oil. We've already seen what $147 a barrel does to the economy. Twenty-five percent of the world's oil comes from about 20 big fields, most of which are in serious decline. Just today Kuwait said OPEC will keep production steady. Either they do not want more money or they cannot pump more oil. Your choice. Remember, “the one thing depleting faster than oil is the credibility of those measuring it.”

Porn O'Graph: We've only just begun...

Tuesday, November 17, 2009

SAR #9322

This circus is almost worth the price of admission.

Revisionism: Roubini now sees high US unemployment as permanent and unavoidable due to decades of outsourcing labor to the lowest bidder. This started long before the current recession and will continue long after. His solution requires shovels and “bold policy initiatives” to protect the country's remaining jobs.

Time-Share: Why don't California and New York simply require everyone to prepay the taxes they will owe over the next three years. This would help them through the current insolvency, just as it is solving the FDIC's funds shortage problem.

How Far is Down? The IEA World Energy Outlook says the world will produce 105 mbd in 20 years – 20 mbd more than now. But some IEA insiders think the figure is likely to be closer to 90 mbd. Scientists from Great Britain and Sweden claim the figure is likely to be 75 mbd. In that our civilization rests on cheap and plentiful petroleum, it'd be nice to know who's right.

Memory: I do not have much patience with those who claim “we should get out of the way and let the private sector do its thing.” As I recall, we did.

Political Process: In order to extend unemployment benefits another 20 weeks for hundreds of thousands of the jobless, the art of politics demanded that the banks get a little something (a renewal and extension of the buy-a-h0use bribery program) and big business gets a little something for ($33 billion in tax breaks). Which part of this is socialism, which part capitalism?

Oversupply and Demand: An ExxonMobil executive explains that the demand for oil is being paid for from a growing supply of dollars. The weakening US dollar has added at least $20 to the price of a barrel of oil. Shh. It's a weak dollar, it is not inflation.

Time Flies: In 1989 the UN unanimously adopted the Convention on the Rights of the Child. The convention recognizes every child's right to develop physically, mentally and socially to his or her fullest potential, and to be protected from abuse, discrimination, exploitation and violence. Only Somalia, which has no effective government, and the United States, for much the same reason, have not ratified the treaty.

Terminology: Under the economic leadership of Turkey a reorganization of international relations involving Iran, Iraq and the rest of Southwest Asia is taking place. 'Rimland' seems to be the new name for what was once the Ottoman Empire.

Free Markets, Anyone? The latest allocation of blame for Wall Street's greed-based destruction of the economy is the claim that it was China's fault for"exporting overcapacity to the rest of us on a grand scale." And the Colombian and Mexican drug lords force US citizens to buy all those nasty drugs, too.

Yea or Nay? Does the American public have the right to see the evidence of crimes committed in their name?

You Ain't Seen Nothin' Yet: Fully 25% of all US jobs are out-sourceable, to be lost forever.

Hunters, Gatherers: The world's population has grown from 2.5 billion in 1950 to 6.8 billion today. The same 60 years have seen the discovery and consumption of fossil fuels on a unprecedented and unrepeatable scale. The problem is that the world’s 6.8 billion inhabitants cannot survive at our current level of comfort without enormous quantities of fossil energy, and those fuels – especially petroleum – are quickly going away.

Porn O'Graph: Peeking at peak oil.

Monday, November 16, 2009

SAR #9321


Ignorance, the all-purpose American excuse.

Identity Crisis: If the recession is over, why extend and expand the buy-a-house-bribery, promise to keep interest rates close to zero for a couple of more years, give big business billions in tax breaks (5 year loss carry-backs) and socialize nearly 80% of the housing market through Freddie, Fannie, FHA and such? If the economy is a confidence game, how come the consumer has no confidence? Or is the market simply on a sugar high from the dollar carry-trade?

Revisionism: Republican National committee quickly dropped previously covered elective abortions from their health insurance – once the public found our. But do not despair, the rich can afford their own abortions.

On Deck: Production at Mexico's Cantarell oilfield has fallen 25% since 2004, and the country's days as an oil exporter will end within 2 years. It's days as a country are not expected to last much beyond that, for 40% of the government's income comes from petroleum and the drug lords do not seem anxious to share their income with the government.

Harvest: The largest problems with bringing the alleged September 11 conspirators to trial in NYC are (1) the prosecution cannot use information obtained by torture and (2) a lynch mob may storm the court and kill the accused before the government can.

Spoiling the Spoils: US and British petroleum giants are gaining access to Iraq's oil, even as Total's CEO says Iraq's plan for production reaching 12 mbd “is crazy,” and 7 mbd is quite optimistic. Who says invading Iraq wasn't worth it?

Harvest II: There have been remarkable increases in birth defects reported from Fallujah, Basra and Najaf, cities where combat was intense and prolonged. Unmentioned, so far, has been the US use of depleted uranium munitions.

Trumped: Can the Legislature grant the Executive the power to preempt the Judiciary? Apparently, for Secretary of Defense Gates, using 'new powers delegated by Congress', has forbidden the publication of photographs of tortured US detainees, “making it unnecessary” for the Supreme Court to rule on the issue. Can the Supreme Court rule on the constitutionality of this process? Will anybody listen?

Growth Spurt: A desire for the comforts of modern civilization will keep the demand for petroleum growing in the world's emerging economies, guaranteeing that demand will continue to rise beyond supply, no matter what the price. In the non-OECD countries, despite the world-wide recession, there has been no slowdown in the increasing consumption of petroleum.

Doubling Up: S&P downgraded 26,000 mortgage-backed securities in 3Q, more than double the previous record in 4Q08. They said this “continued to reflect our view of the weakening credit quality of the underlying collateral.” S&P has now downgraded 71% of all MBS originally rated AAA when issued in 2005,6 and 7. If their original AAA ratings were that inaccurate, why should we believe them now?

Penultimate Word: Soothsayers are reading the entrails of thousands of turkeys, trying to forecast seasonal retail sales. Common agreement says more than 2005 but less than 2006 and 2007. But in 2005 ten percent of the nation was not unemployed and few of our neighbors had lost their homes to the banks and we all felt rich because our houses were worth more than ever. Color me doubtful. And that's the last entry here on retail sales until the frenzy is over.

Discovery: The headline read “NASA finds buckets of water on the moon.” The water didn't surprise me too much, but the buckets sure did.

Between the Lines: Neither conventional fossil fuels or alternative energy sources can be counted on to provide the amount and quality of energy needed to sustain current levels of economic activity beyond the next few decades. The commonly held assumption that alternative energy sources are capable and available is wrong, for energy systems must yield more energy than it takes to build and operate them. For a calm and reasoned discussion of the basics and implications of the “net energy” equation, both this summary and its full (pdf) report is strongly endorsed. Class dismissed.

Saturday, November 14, 2009

SAR #9319/Weekender


So far, regulatory reform is neither.

Tea Leaves: September's US trade deficit was $36.5 billion, up 18% from August. Some of that was the increased cost of petroleum, but it also shows an increase in customer demand. The patient's appetite is back, even though he's not back to work yet.

Grinch: Goldman Sachs, which has recently been bragging that it does the Lord's work, is taking the party out of Christmas. Mr. Marley said it was only fair they forego a big celebration this year, in a show of sympathy for those who are not getting $700,000 bonuses.

Oversupply and Underdemand: About one in seven housing units (houses, condos and apartments, ) was vacant in 3Q09. Part of the glut comes from foreclosures, the rest comes from apartments left empty as the kids move back in with Mom and Dad.

Reality Reporting: Walmart's sales were down 0.4% in 3Q09 even though customer traffic was up, as was market share. But a bigger piece of a smaller pie was still a smaller piece than they wanted.

Twins: Just as the health insurance companies will be the big winner from 'health care reform', the big energy companies will be the winners under the 'cap & trade' legislation. In both cases, the citizenry will pay more and be quite confused as to what, if any, benefit was gained. Rule of thumb: If Wall Street lets Congress pass a bill, it's not going to hurt them.

Sound Familiar? "Rather than deal with the problems directly they attempted to circumvent the problem by creating an environment where the government spent hordes of money to prop up failing institutions." Was that Japan, then, or the US, now?

A Clue: In the 1950's Bolivia's Chacaltaya glacier covered 1,600 square meters and hosted the worlds highest ski-run. Today it covers about 500 square feet (50 square meters), an area barely large enough to contain the rusting hulk of the abandoned ski lift.

Good Question: If stabilization in the housing market comes only through government subsidies and artificially propped up home prices, is it real, or stopgap?

Shell Game: $38 billion of Citi's capital doesn't exist – it's an accounting trick. They get to count as an asset the $38 billion in carry-forward tax credits they earned by losing billions and billions of dollars. If they don't have sufficient profits to use the tax credits, they go up in smoke and there goes a lot of their capital. Well, until Congress re-writes the law for them. Again.

Assigned Reading: Krugman asks why Germany isn't suffering as much as the US and suggests there might be a lesson there. Economics, of course.

Water is Wet: The FHA has belatedly learned that people who borrow their down payment money “are not equipped for home ownership.” They go into foreclosure 2.5 to 3 times as often as people who saved up their down payment. This lesson has cost the FHA about $10 billion so far, which may be why their reserves are only 25% of what they are required to be.

More Clues: Measurements confirm that Greenland is shedding its ice sheet at an ever accelerating rate.

Spade is Spade: The pro-coathanger Stupak amendment to the health reform bill should be removed and discarded. It is simply another attack by the people that genuinely hate women – especially poor women - coercing them to bear unwanted children they cannot support so the saintly can go to church and claim they've cleansed their dirty minds. It is an attack on the right of women to decide when and if they want to bear children – which the white male right sees as tantamount to their sinning without suffering, a practice that is reserved for them.

Relief: All you folks struggling to buy a $400,000 house can relax, the government is going to continue to coddle you for another year by pretending that ordinary folks need to spend $417,000 on a house and deserve help in doing so from Uncle Sam's taxpayers.

Porn O'Graph: Higher Highs, Higher Lows, Can't escape wherever you goes.

Friday, November 13, 2009

SAR #9318

Life is seldom linear.

Transformation or Emergence? Obama is reportedly dissatisfied with the options his generals have brought him (and leaked all over the media) and ready to tell the American public what they already know: Afghanistan is an enormous and unwinnable mistake and it is time to declare victory and bring the troops home. Is Obama about to actually become President?

Surge: Mortgage applications were up 3.2% last week – based on refinancing existing mortgages. Applications for new mortgages to actually buy a house were down 12% to the lowest rate in a decade. Guess which number got the headline.

Important numbers: While initial unemployment claims are only up 6% y/y, continuing claims are up 51%. Job losses are slowing, but not many people are finding new jobs. Over 4 million are collecting extended federal benefits and just over 9.5 million are still receiving unemployment benefits.

A Penny Saved: Countries from Brazil to the Philippines, Russia to Thailand have been propping up the dollar this week. But this cannot go on for long and in the end the efforts will not be successful. The dollar's days are numbered – even though it is still a pretty big number – and the old familiar world dominated by the dollar is clearly coming to an end.

Oops: Beijing's biggest blizzard in 54 years is being credited, or blamed, on the Beijing Weather Modification Office. Makes you reconsider letting the engineers save us from global warming...

Definition: “Sophistry: a subtle, tricky, superficially plausible, but generally fallacious method of reasoning. 2. a false argument; sophism.” For example, arguing that something called 'Obamacare' “will seriously harm precisely those poor and uninsured citizens it is ostensibly designed to help. The harm will come by compounding mass unemployment and depriving these citizens of consumption choices.”

The Emperor: Blackwater guards our embassies, our ambassadors, even the secretary of state and members of Congress. It has over a half a billion dollars in contracts in Afghanistan alone. It still operates at will in Iraq. The same Legionaries that crowned Flavius Claudius Julianus and guarded him, removed him. Quis custodiet ipsos custodes?

True or False: Rising oil prices will derail the current recovery: (a) True (b) False (c) Current recovery?

Trend? October foreclosure filings declined 3.3% from September, for the third month in a row. If you stop right there and don't inquire into delinquent-but-not-filed numbers and other programs keeping houses out of foreclosure such as the government's loan modification program, things sound pretty peachy. But some say this is at best a pause in the storm and that 75% of home owners' losses are yet to arrive.

Cost Plus: The US spends about $1.5 trillion a year on its military – 54% of the federal budget. What does it get for all that money? 8 years of stalemate in Iraq, 9 years of losing in Afghanistan, Guantanamo, torture, the Patriot Act, and take your shoes off before boarding. Anybody keeping score?

Lying Eyes: Don't be fooled by the Dow's 40% rise so far this year, we are still in a bear market and equities have only risen because the supply of Bigger Fools is enormous – some say. On the other hand, the Dow is up 40% this year. If the Market's never wrong, how can it be over-valued?

Porn O'Graph: The trend is not your friend.

Thursday, November 12, 2009

SAR #9317

The future we get is the one we choose.

Dark Alley:   Russia has warned Europe that it had better make sure Ukraine pays up, in full, and on time. Or else...

Self-Hoisting Petard:   Goldman Sachs insists that it is misunderstood and that its contribution to the well-being of humanity go unrecognized. Goldman's assets have quadrupled in the last ten years. I feel better already.

After the Dance:   What the down side of the peak oil curve means to our economy, illustrated.

1215 &tc:   Under a new government ruling, every phone call, text message, email and website visit made by every citizen will be recorded and stored for a year. Over 650 different public bodies, from the police to the ambulance services, will have access to these recording without seeking permission from a judge or showing just cause. Patriots will have nothing left to fear.

Trendsetter?   California, they say, is where all the fads start.  In Orange County – the quintessential California locale – foreclosure notices are at a record high and rising.

800 Pound Gorilla: What no one mentions in all the discussion about structural unemployment and a new higher level of normal unemployment is this: Capitalism works too well, in two ways. First it manages to keep increasing production per employee, allowing companies to terminate excess employees. Then it puts workers in one area into competition with others elsewhere and gives the ever fewer jobs to the lowest bidders. In the long run companies have lots of products that no one can buy because (a) they don't have a job or (b) they have a job that doesn't pay a living wage. That's the real problem and no one wants to talk about it. Gloss it over with theoretical promises about a golden future, yes, but don’t actually tackle the problem in the real world.

Sunshine: Scientists took the weekend off from dire warnings about global climate change and announced that there was new evidence that dark chocolate helps ease emotional stress.  Expensive dark chocolate works best.

Excellent Question:  Having shot our wad (and most of our children's allotment, too) on the current economic disaster, and having done nothing to moderate the forces and conditions that brought it about , what are we going to do in a year or three when the party poops out again? And it will, for while subprime mortgages and derivative deviltry may have tripped up Wall Street, it was oil at $100+ a barrel that killed the world economy. And it's getting ready to do it again.

Required Reading:   Which big country will default first? (a) Britain (b) Japan or (c) the United States.

Our Gang:  After Blackwater guards were caught murdering 17 Iraqi civilians, payment of about $1 million were authorized by Blackwater Worldwide to silence Iraqi authorities and to sidetrack their investigation into the incident.

Neverland: In case you had any doubt, Wall Street CEOs and board members have no remorse for the wreckage they have caused and do not feel they were the problem. It is also hard to find one who feels he had been 'rescued' or 'saved' by the taxpayer.

Consider Yourself Warned:  The Justice Department has demanded that Indymedia – which hosts a group of liberal journalists from around the world, advocating social and economic justice – turn over information on all details of reader visits. They also demanded Indymedia not disclose the existence of the subpoena. Relax, so far SAR has not been so served, and if we were we couldn't tell you about it anyway.

Ups and Downs: Reports show that house prices fell in 80% of US cities during 3Q09, while sales picked up a bit.

Porn O'Graph: Where the 'new' oil is.

Wednesday, November 11, 2009

SAR #9316


Plans that rest on governmental change are fatally flawed.

Don't Panic:  The International Energy Agency's latest report has been poked and prodded and even accused of being less than forthcoming. The takeaway point is this: The IEA thinks the world is going to go on a fossil fuel diet, but even so will consume 105 mbd in 2030. They suggest that nearly half that oil – about 50 mbd – will come from fields that have yet to be found and developed, while only 25 mbd will come from current oil fields. They do not say where oil in those quantities will be found.

Career Path:  As more Americans compete with immigrants for pick-up work as day laborers, one wonders just what 'employment' means in government reports.

Asked & Answered:  “Do US businesses hate their workers?” Yes, why did you think anything had changed?

Cliff Note: The insurance companies are the problem, not the solution. They drive up the cost of health care. They avoid paying bills so effectively that hospitals and doctors have to hire their own bureaucracy to fight them. Since 1970, the number of physicians has increased by less than 200% while the number of administrators has increased by 3000%... 31 cents of every health care dollar goes to administrative costs, not toward providing care. H.R. 3962 would require 21 million Americans to buy private health insurance from the very industry that has caused the problem. It will give the insurers at least $70 billion in new annual revenue, from the taxpayers either directly or indirectly. This has nothing to do with health and much to do with insurance company profits.

Idle Hands:  While you are sitting around not finding work, why not give some thought to a nice vacation – airlines and hotels are offering really good deals and you're not doing anything anyway.

Good Question:  Why die for Karzai? Or for a pipeline?

Communal Housing:  So far Fannie and Freddie have taken $121 billion from the taxpayers. It's as though we the taxpayers have bought a million houses for our neighbors at $120,000 each. You going to the house warming?

New Data:  A new study suggests the percentage of carbon dioxide emissions absorbed by the earth and that going into the atmosphere has remained essentially the same for the last 150 years, even as the amount of CO2 emissions has climbed from 2 billion to 35 billion tons a year. Terrestrial and oceanic ecosystems apparently have a greater capacity to absorb CO2 than previously suspected. This research does not suggest how much longer this can continue. We've been lucky so far, but there must be some level at which the earth's systems will get full and force a much greater percentage of CO2 into atmosphere, accelerating the greenhouse effect.

I'll Drink to That:  British wineries have resumed making red wines, a practice they abandoned 600 years ago when the climate got too cool. Warmer springs and milder autumns in recent years are credited, avoiding any suggestion that the climate is actually warming.

Tuesday, November 10, 2009

SAR #9315

Just in time for Christmas: Bailout based bonuses.

Short Version: Health-care stocks rose strongly Monday, which is all you need to know about the health-care reform legislation.

Quoted: "There are families not eating at the end of the month, literally lining up at midnight at Wal-Mart stores waiting to buy food when their government checks land in their accounts.“

Stocks, Gold, Oil Soar: As long as central banks promise not to raise interest rates until it is too late, markets will keep zooming, and the dollar will fall – all until it's far too late.

Future Futures: Pretending (a) there will be a 2017 and (b) they have some idea what is going to be happening then, oil speculators have driven the price of December 2017 oil to $100. Imagine, oil at only $100 a barrel.

Scheduling Problem: Investors are turning to TIPS for protection from the expected bout of inflation that Bernanke promises us won't happen (until after a crippling round of deflation).

Made in China Egypt: Chinese manufacturers are outsourcing production to Egypt, seeking cheap labor, investment incentives and unrestricted exports. Labor costs, like water, seem to seek its lowest level.

Things You Knew: Banks prefer to lend to a deadbeat who's so far in debt there's no way it can ever be paid back than to take a chance on small business or the working man. How else do you explain why banks are putting most of their money into government debt rather than investing in the American economy?

Paranoia: Elections are seldom won by the weight of rational argument. Elections – like economies – are swayed by hopes, fear and greed. Mostly fear. This explains Beck, Limbaugh, and Palin.

Music Lesson: Revenue shortfalls force cities to cut back on programs and services and turn to the citizenry for more revenue. Remember that rat population increases are a universal consequence of declining infrastructure spending and vote yes on that tax increase. The Pied Piper doesn't work for free.

History Lesson: Saudi Arabia has targeted $75 a barrel as a fair price for both consumers and producers. This replaces their April 2004 commitment to keep oil in a $22 - $28 price range.

Observation: The continued increase in our nation's debt load will inevitably bring us to the point where our choices will be those once reserved for banana republics and failed states, and the unthinkable becomes not only thinkable but inevitable. The only alternative is huge spending cuts and steep tax increases. Keep your passports handy.

Missing: In the latest installment of 'Revenge of the Sea', a Japanese fishing trawler capsized when it tried to haul in a net full of giant 400 pound jellyfish. The waters around Japan have been inundated with Nomura's jellyfish this year. Experts have not yet blamed global warming.

Bubblology: What the IMF said: Capital flows driven by yield differentials are complicating monetary policy. What they meant: The dollar is weak and getting weaker, inflating bubbles all over the world.

Porn O'Graph: Send in the reserves.

Monday, November 9, 2009

SAR #9314

Remember, the economy does not need you anymore.

Charades: The only way to guarantee healthcare is to guarantee healthcare to all: single payer, public option. Anything else is just a gift to the health insurance industry.

Barn Door: Defaults on mortgages guaranteed by the FHA are running at 24% for the 2007 vintage and 20% for the 2008 vintage. The FHA insures about half of all US mortgages, so these numbers suggest that at least 12% of US mortgages written in 2007/8 are defaulting. Never fear, for the FHA has recdntly raised its standards.

Asked and Answered: The clever folks in Washington have extended and expanded the Home Purchase Tax Credit. Is this wise? No, but it'll make the game last a little longer.

Treasure Hunt: In the best of all possible worlds, the US needs to find $15 trillion in extra income just to pay off our debt. I've checked under the sofa cushions and it's not there. Best guess: It won't be the best of all possible worlds. It is simply a question of how much pain, how soon, for how long.

Bait and Switch: Chrysler, which used its Fiat divisions electric car development program as part of its plea for the $12.5 billion in federal aid, has abolished the development team and dropped its targets for the production of battery-powered cars.

Beggar Thy Neighbor: The US put $2.6 billion in “anti-dumping duties” on Chinese steel, following last month's 35% tariff on Chinese tires. China opposes such protectionist measures and promised to enact some of its own. Quacks like one, too.

Quoted: "At the highest level this bill will enshrine in law the monopolistic powers of the private health insurance industry. There's no other way to look at it." Congressman Eric Massa (D-NY)

Sounds Good To Me: “The IRS should disallow tax deductions for unreasonable compensation paid by publicly held corporations.”

Mooted: “ Legal advisers had decided that under the United Nations convention against torture, it is not illegal to obtain or use intelligence gained from torture as long as we didn't do the torture ourselves.“

Transliteration: China has offered various African countries a total of $10 billion over the next three years, saying China was a ‘true and trusted friend‘ of the continent and its people. How do you say “Trojan Horse” in Chinese?

Cleaning Up: "Every serious discussion of the environment ... is ultimately about oil. [Our] whole way of life is dependent on cheap oil. Sooner or later, cheap oil will be over. Then what?”