SAR #10128/Weekender

Are we confusing activity with accomplishment?

Because:  Everyone expects a Greek default and exit from the euro.  No restructuring (finance speak for welching on its debts), even though that's what is needed.  European banks couldn't stand the losses and European central bankers don't have anything left to bail out the banks again.  Greece needs something that actually produces growth - a devaluation – and it cannot do that while in the euro zone.

Bad, Then Worse:  Professor Shiller is worried that the economy will grow very slowly “until the next recession.”

Ash Me Again:  Eyjafjallajokull has “changed back to an explosive eruption...  The ash plume rises high above the crater and considerable ash fall can be expected.”   There is no sign that the eruption will soon end; flights might.

Bell, Book & Candle:  Historically in the US, debt, disposable income, oil supply and oil prices appear connected.  If oil is available and cheap, income is up and debt down.  If oil is tight and expensive, debts increase and disposable income dries up.  Predictions are for the price of oil to increase as the supply dwindles.  Your move.

Echo, Echo:  The GOP's lead-off batter in the net neutrality war claims the administration is pursuing a "government takeover of healthcare the Internet," with a “job-killing big government scheme,” that will “expand the power of the federal government."  He warns that “it puts bureaucrats in charge of your medical decisions the Internet.”  Frugal, those Republicans, recycling like that.

Poster Child:  The Levy nuclear power plant in Florida has been delayed again, this time until 2021, and its estimated costs have been raised again. Which is why nukes are not going to save the day.

Teaching points:  The crisis is not over.  Much of the developed world has lived beyond its means.  The banks, having been saved by their host countries running up even more debt, have sent in the bill collector (IMF). Greece is only the beginning, and the IMF has no interest in improving the Greek economy, only a fixation on cutting, cutting, cutting.  And privatizing.   That the cuts will devastate  Greece and the Greeks does not matter – paying back debts to investors is paramount.   And this is just the out-of-town tryouts.

Who & How Much:  Transocean owned the rig, BP rented it, Cameron made the BOP and Haliburton was doing the drilling services – cementing casing at the very moment og the explosion.  The Coast Guard has named Transocean and BP “responsible parties” which means they must pay all cleanup costs.  They are also liable for property damage, lost wages and business income, ecosystem damages and so on.  But their liability is capped at $75 million – total, not per incident.  BP and Transocean will undoubtedly share the costs and liabilities with the junior partners.

Revised Version:  “Market fundamentalism”, that unique American economic myth (never embraced outside the US) combining rigid rationality and extreme selfishness, has died an ugly, much deserved death. Along with it, its political equivalent 'government is the problem' should also be taken off life support.

Two Wrongs:  Under the headline “Canada's oil sands are a blessing” some well-meaning boosters point out that Canada's oil sands production “looks pretty good” compared to offshore drilling.  Not if you fly over and take some pictures.  Or want to drink the water anywhere near the extraction site.

Simmer Until Done:  If we sit idly by and let business as usual continue, it is possible that global temperatures, on average, will increase 12ºC.  The chance stands at about 5% - one in twenty.  Ask someone in Nashville or on the BP board of directors what that means.  And at that level of warming, “a large fraction of the planet” will be uninhabitable (in the sense that if you were outside for a few hours during the hottest days of the year, even in the shade with wet clothing, you would die).  Are you feeling lucky?

Pron O'Graph:  Roll out the barrels...