Friday, October 31, 2008

SAR # 8305

How many people, consuming how much stuff,

can one planet support?

Decreasing the Rate of Decrease: Joy! GDP only fell by 0.3% instead of 0.5%. Market indexes soar 1.5% even though this is the sharpest drop in GDP in years. The fine print said personal consumption declined at a -3.1% rate, first decline in 18 years, and disposable income fell 8.7%. Accentuate the positive: The tumor isn't growing very fast, Mr. Jones.

Below Zero on the Investment Scale: Fed funds are now at 1%. Inflation is in the 2% range. Free money.

Me First! Me First! There's a Treasury/FDIC plan afoot to force encourage lenders to reduce borrowers' interest rates or principal amounts (From each according to his ability) based on the homeowner's ability to pay (to each according to his need). Taxpayer to make up the difference, of course.

Chinese Bailout: While the US is indenturing itself to save a few rich folks, China is investing in roads and railways to remote parts of western China. These pathways will carry Chinese manufactured goods to Central Asia and bring back petroleum and other resources.

Fundy Money: The US debt has increased $880 billion in the last six weeks, as the Treasury scurries about selling pieces of the future to fund TARP and the other rescue 'facilities'. Just like its citizens, the US cannot afford to be sick.

Reality Check: The professionals - senior US military and foreign policy leaders - have realized that the war in Afghanistan is unwinable. The goal is simply to keep Kabul more or less under the US thumb, even if it means bribing the warlords and Taliban not to shoot at US forces. It's the Petraeus plan, already successful in Iraq, where the US is still paying various factions not to cause trouble.

Balls: A.I.G. has declined to provide a detailed account of how it has used your the Fed’s money.

Rabbit, Hat? Methane levels rose abruptly in Earth's atmosphere last year. No one knows why, or from whence the millions of tons of methane came. Methane is 25 times more potent than CO2 as a greenhouse gas.

Roundabout: Somewhere the plan changed from taking toxic paper off banks books, to recapitalizing banks, to giving loans to all sorts businesses, to a corporate welfare plan and now a homeowner bailout. Are there any exit signs on this traffic circle?

Short Term Memory: Gasoline prices did not stay high enough long enough to change the driving habits of Americans. Now that prices have dropped, demand is rebounding as more people are logging more miles.

Poker: The first rule about bluffing is that sometimes you lose. Somebody should'a told George.

Sophomoric: It's worse than you think. Even MIT grad students greatly underestimate how much CO2 emissions must decrease to prevent serious climate warming. The answer is "all the way to zero". And then start removing CO2 from the air - 350 ppm is the passing grade.

Business Junket: Corporate bonds continue to lose value in a marketplace that sees more bankruptcies ahead. Already about half of US companies debt is rated "non-investment grade" by S&P.

Porn O'Graph: Pure as the Driving Snow

Thursday, October 30, 2008

SAR #8304

It costs more to lose a war than it used to.

Taking the T-Bird Away: Credit card companies have decided to make the recession deeper and longer by cutting back on the credit extended to cardholders. In that the US economy only functions by plunging consumers ever deeper into debt servitude, this is not good news.

Darwinian Economics: Continuing our trip to 1930's Italy, the government -under the cover of Paulson's TARP - is deciding which companies (banks, insurance companies, car companies, pizza parlors, organic farmers) get life-saving cash infusions and which get kicked into the gutter to die.

Too Oily to Tell: Last month China increased its crude imports by 46% over the previous September. India's imports of crude were up 17%. If this continues, it's a good thing the rest of us are on a diet.

Starecase: Since the 1880's the average S&P's trailing 10-year P/E ratio has been 16.3. Every major recession has resulted in P/Es falling below 10 for an extended period of time - lasting decades, not years. The daily ratio is now a bit below 15, but it will take months, if not years, for the long term average to approach 10. May not be a Fat Lady, but it ain't singing, either.

Walks Like A Duck: GMAC wants to become a commercial bank. Don't see why not, they sure have made a lot of bad loans.

Doctrine 2.0: Bush doctrine 1.0 called for preventive war - attacking those who might be thinking about attacking the US. The 2.0 upgrade calls for dropping bombs on and killing citizens in countries at random, ignoring international borders, sovereignty and all that old Peace of Westphalia stuff. If they complain, that's proof they were doing something.

Mary Sunshine: Roubini sees the S&P500 falling another 30%. He's getting optimistic; the note on my bulletin board reads 450.

Tab A in Slot B? Magazines are full of What You Can Do To Save The Planet stuff, which mostly involves around biking to work and buying screwy light bulbs. The real need is a program for What We Can Do As A Country, uniting behind giant, expensive government programs - and Drill Baby Drill is not one of them.

Clamming Up: The oceans have been slowing global warming for several centuries by absorbing excess CO2 from the atmosphere. This has made the ocean progressively more acidic, threatening shelled creatures and thus the whole chain of marine life.

Yes, But... A leaked draft of the IEA's World Energy Report says that global oil production is falling much faster than was predicted. Massive investments will be needed just to replace the 6 mbd (9%) that's being lost to depletion. The current economic slowdown will give the industry more time but less cash with which to develop new and alternative sources. The IEA says the leak was unauthorized. It will be interesting to see how much cheerier the 'official' report is, come mid-November.

Ketching Up: The lab boys have stuck some snapdragon stuff inside tomatoes and made them so good for you you'll need a prescription.

De Fault Is: The US Treasury, between the deficit, the wars, the bailouts and Fannie and Freddie's losses, will have to raise about $2 trillion next year. While it has long been clear the US will never repay its debts, the point is fast approaching when it will have to borrow to pay the interest due. Default or devaluation, which will it be?

Porn O'Graph: Exactly how miserable are you?

Wednesday, October 29, 2008

SAR #8302

It should be called the Dow Jones Gullibility Index.

110º In the Shade: Everybody's excited. The bottom was reached and the march upward to infinity and beyond has begun! Or is it just a whole lot of shorts being covered?

Trimming the Hedges: Porsche said it owned 74% of VW (through derivatives). Lower Saxony owns 20%, leaving only 5% of VW's shares available. Hedge funds scrabbled to cover their shorts, briefly driving VW stock from €210 to over €1,000, which made VW worth more than Exxon. It also made hedge funds worth €20 billion less and the DAX rise 7%.

Privateers: Blackwater is being hired to fight pirates off the coast of Somalia. Takes one to know one.

Juvenile Delinquents: At the end of August, serious delinquencies - defined as those 90 or more days delinquent, in foreclosure, or REO - made up 23% of all active mortgages, up from 18% three months before, while 30 and 60 day delinquencies are also on the rise.

Cousins: The EPA's new rules let power plants increase carbon emissions while ignoring pollution controls. This is not a repeat item, it just bears a family resemblance to other Bush administration parting gifts to environmental rapists.

Street Sweeper II: The Pentagon is wants a "Multi-Robot Pursuit System" - taser-armed robots designed to "search for and detect a non-cooperative human." Curfew violators, protesters, Unitarians...

Nose Plugs: Over 22% of First Federal's $4.5 billion loan portfolio is underwater. And it's not the poor folks: The higher the LTV, the higher the delinquency rate. Moody's estimates there are now 12 million underwater mortgages, headed for 20 million. SCUBA lessons anyone?

Hard Times: Bankruptcies, takeovers and miserable performances (not to mention common decency or common sense) will not stop Santa from delivering $20 billion in bonuses to Wall Street. Whatever happened to the old lump of coal?

Trendy: In addition to the obligatory kosher salt, pink salt, black salt, and sea salt, now comes the latest fad: climate change salt. Scientists report a significant change in the saltiness of ocean water is endangering the sea's chain of life, and attribute it to CO2 driven climate change.

The Biggest Loser: Globalization is turning out to be the biggest bubble. Worldwide shipping - the heart of globalization - has fallen off the table. The 90% fall in the cost of shipping stuff indicates that stuff isn't being shipped.

Pig In a Poke: Pakistan's leadership has accepted the IMF's terms for a bailout, setting the stage for a replay of the economic rape described in Naomi Klein's Shock Doctrine. The Ukraine , too, has sold its soul for $16.5 billion. History shows that the objective the IMF/World Bank overseers is the looting of resources from their victims.

Seasonal Adjustment: Retailers keep teaching customers bad habits. First they taught us to wait until nearly Christmas for the markdowns. Then it was Black Friday. Now they're starting the big markdowns right after Halloween. Shop your favorite store early, it might not be around come December.

Porn O'Graph: State tax (non) collections.

Tuesday, October 28, 2008

SAR #8302

The Dow is a form of Numerology.

Question: Why Are The Screw-Ups Still in Charge?

Christmas Club: Much of the impetus behind the Dow's recent fall comes from the forced liquidation of hedge fund assets. As their customers want out, the funds will be forced to dump holdings as they try to raise upwards of $500 billion in cash by the end of the year.
Run Away, Run Away: Three of Australians largest financial funds "suspended withdrawals", forcing retirees to turn to Centrelink, the welfare agency, seeking temporary income support.

End? Which End​? CNBC & friends are claiming that down has turned to up because new home sales are 2.7% above the August level. Not really, sales are down 33% year to year, prices have fallen 9% and the current year is the worst on record.

Apples and Oranges: There are two problems: Banks are broke; worse, customers are broke. Factories, stores, restaurants - the 'real' economy - don't need credit near as much as they need customers.

Out Pattern: A few years ago T. Boone Pickens gave Oklahoma State's athletic program a $165 million donation, in a hedge fund, where it grew to over $300 million. The Okies used it as collateral on a $300 million loan. Now the entire $300 million has been lost to margin calls, and the school still owes the $300 million it borrowed. And they lost to Texas, 28 - 24.

Throw a TARP over It: $5.2 billion of Paulson's purse has gone to finance PNC's takeover of National City Corp. Certainly is a flexible thing, this TARP.

Fair Game: Some say the solution to the global financial crisis in global cooperation via some sort of global regulation of financial markets. It may be nice to think people (and corporations) all over the world will suddenly see the wisdom and value of cooperation, but human nature and millions of years of evolution have yet to be repealed.

Sugar coating: Doctors in the US regularly prescribe vitamins, painkillers and antibiotics as placebos. Now the PC crowd wants doctors to explain that these measures are placebos, which would unmask the ruse and call for increasing the dosage to the new and improved double-strength placebo.

Nearer: Markets around the world crash, yet the Dow plays on. "The biggest currency crisis the world has ever seen" (Bank of New York Mellon) is spreading across Central Asia, the Ukraine, Russia and on into Europe, and the Dow plays on. Didn't they get the memo ?

Ponzi Schemes R US: The US has to borrow all the money Paulson's throwing on the fire, so it markets ever more Treasury bonds. As people - and nations - become leery of ever getting paid back, interest rates will rise, for it is obvious the US will never be able to repay those trillions of dollars. Unsustainable things do not last forever.

Time Fries: The IPCC's 2007 report is now out of date, as discouraging data keeps being reported. The first 'tipping point' that has apparently been reached is the melting of Arctic sea ice, which has reached the point of no return at least 30 years before previously predicted and may be gone within 5 years - for the first time in a million years.

Business as Usual: There is $11 trillion in outstanding corporate debt. Loose lending terms have allowed many troubled companies to postpone a day of reckoning. The terms let borrowers delay payments, issuing IOUs as payment or adding the interest to the loan balance. Worked well in the mortgage field, right?

Porn O'Graph: New new home data!

Monday, October 27, 2008

SAR #8301

Get ready.

Nearly Nil: Economists agree we're too smart to have another Great Depression, et none seem to have an explanation for the 40% drop in the Dow, the 90% drop in the Baltic Dry Index, the 15% drop in container shipments...

Warning Shot? The overseas edition of the People's Daily headlines that the United States has plundered global wealth by exploiting the dollar's dominance, and suggests the world urgently needs other currencies to take its place. Ah, the free press.

SOOooiee: AIG's back at the trough. How much did they lose on Lehman CDS?

Semi-Tough: In the last quarter, Volvo's world-wide truck sales are down 55%. Scania's truck sales in western Europe are down 69%. In the last three months Volvo sold exactly 115 trucks in Europe, compared to 41,970 in the same period last year; a decrease of 99.7%.

Definition: An asset class which everybody expects to continue to rise in perpetuity is called a 'bubble'. That pretty well makes the entire stock market a bubble.

Not Ready for Prime Time: Iraqi Vice President al-Hashemi's Iraqi Islamic Party is upset that senior party officials were attacked in their homes - and in their beds -by US forces. Meanwhile, a US Predator fired missiles into Pakistan killing 20 (a) militants (b) women & children or (c) wedding guests. region on the Afghan border that is a stronghold of a Pakistani Taliban leader, killing up to 20 militants, intelligence officials said. And US Special Forces raided Syria, killing 8 "peope". A US officer admitted "We are taking matters into our own hands."

Common Sense: Why are we willing to trust the same bunch of incompetent liars people who led us into this wilderness to suddenly find a compass lead us out? While you're thinking on that, drive down to the home improvement place and buy some rope.

Wedding Bells: GM and Chrysler want to get hitched, but can't afford the wedding. They want the Treasury to pay for them to elope, and in return they'll name the 2010 family sedan the Paulson 750.

Still #3! Mexico and Turkey beat the USA out of first place in the race to have the greatest income inequality. Richest 10% of Americans earn an average of $93,000, the poorest 10%, $5,800.

Hold Your Nose: One out of three houses bought since 2003 are now worth less than they were sold for. One out of six American homeowners are underwater on their mortgages. That's 12 million potential vacancies. $750 billion is just the down payment.

Oxymorons: 304th Military Intelligence Battalion has determined that Twitter - a computer based rapid communications system - is a danger to the Pentagon because it is used by social activists, human rights groups, vegetarians, atheists, and others. These potential terrorists also use telephones, cars, and, occasionally, post cards to communicate.

Defining "Is": According to an executive at JP Morgan Chase, their $25 billion from Uncle Paulson is going to be used to make acquisitions, not loans.

"Fraud": For the three years ending Sept 2005, nation-wide only 18 people were convicted for 'ineligible voting.' So much for the Republican's 'massive voter fraud.' The fraud is that they keep harping on a non-event. Nonetheless, Bush has ordered the Justice Department to interfere as much as possible in places where the Democrats have registered large numbers of new voters.

Porn O'Graph: Bubbles we have burst...

Saturday, October 25, 2008

SAR #8299/Weekender

What's worse, politicians who know they are lying,

or economists who don't?

Numerology: Black Thursday fell (bad pun) on October 24th, 1929. But that was just the initial crash. There were two more legs down, with a catastrophic drop on Black Monday, the 28th, and again on Black Tuesday, the 29th. Enjoy the weekend!

Cover Girl: The highest paid person on the GOP presidential campaign staff is Amy Strozzi. Strozzi? Oh, Twich's traveling make-up artist.

Lead By Example: GE Capital Corp, in an act of self-sacrifice, has announced it will be the first commercial paper-hanger to avail itself of the taxpayers' money at low, low introductory interest rates by selling commercial paper to the Fed next week.

What Happened? Banks are not lending to hedge funds. The funds liquidate positions in stocks, commodities. This drives down prices. The farmer can't get a loan to plant. The shipper can't find a bank to honor a letter of credit. The wholesaler's bank won't lend against inventory and the warehouse can't make payroll. Soon there's no food in the supermarket. Chain reactions.

Picky, Picky: There have been 3.82 million "existing homes" sold YTD. At that rate, fewer than 5 million will be sold this year. If they are sitting there empty, they are houses, not homes. After 11 months they are REDUCED! houses.

Fine Balance: The balance between petroleum supply and demand was so fine that a small shortfall sent the price from $70 to $140 a barrel in a year. A small but growing excess has brought the price down below $70 in a couple of months. This proves, rather than disproves, that we have reached peak oil.

Fine Print: Before you run off and invest in the banks, read the small print packed in Paulson's TARP plan: No dividends may be paid on common stock until the 'infusion' is paid back. None on preferred stock either, although they will accrue the dividends for later payment.

Dead In The Water: Brazil's ambitious plans to save the developed economies by producing billions of barrels of oil from those deep off-shore fields have run up against a lack of financing. You can't borrow your way out of debt.

Bad Movie: The banker throws the farmer out of his house. The plutocratic miner poisons the valley with lead. The Bush Administration weakens the rules to help both. Dudley Doright is nowhere to be seen.

Showers, then Rain? In weather forecasting, the next 12 hours is usually accurate, the next 12 is about 75% right, the third 12 hours is about 50%. Anything after that is a guess. Economies are far more complex than weather systems.

Nouriel Roubini: The world is heading for a protracted two-year recession that will end America's dominance in the world and may lead to "a massive, ugly war." Roubini "would not be surprised" if major stock markets close for a week or two. The markets are in a sheer panic. Over 30% of hedge funds will close. There is not going to be enough IMF money to support Iceland, Belarus, Hungary, Ukraine, Pakistan, Argentina and more. Some put Russia on that list.

Porn O'Graph: Stock up! A year's supply...

Friday, October 24, 2008

SAR 8298

This is quickly moving from 'recession' to 'generational memory.'

Refresher: As a public service, you are reminded: If the Dow drops more than 1,100 points before 2pm EST, trading will halt for an hour; 2,200 points leads to a two hour halt. A drop of more than 3,350 will lead to a halt for the rest of the day, week, year...

Simon Says: "The market is in a panic. Hundreds of hedge funds will fail. Financial markets will be closed for a week or more. Investors will dump assets and flee." Wasn't Simon, 'twas Professor Roubini

Some Doctor, Some Cure: The credit bubble was based on the cheap supply of money and credit created by the central banks. The proposed cure is a massive increase in the supply of money and credit. My alcoholic uncle had the same approach to hangovers.

Fine Print: The US Constitution provides certain rights and protections to US Citizens. Unless - like over 60% of them - they live within 100 mile of the US Border. Within that area citizens cede their rights to Homemade Security's Border Patrol.

Betting Slips Show: Corporate debt is following subprime derivatives down the garden path, as losses on $1.2 trillion in corporate CDOs approach the 90% level. If $600 billion in subprime write-offs prompted a couple of trillion dollars in federal bailouts, how much more will a trillion in CDO write-offs cost China the taxpayer?

All Smoke, No Fire: In the 44 years since the GOP began alleging massive Democratic inspired voter fraud there has never, ever, not even once, been an actual case. No evidence. No arrests. No prosecution. Not once. And no, they have no shame. Ultimately, they simply don't want you to vote.

The Unreal Economy: Statistics show the absurdity of the financial system. Of the $4 trillion that circulates through the world's markets every day, less than 2 % is engaged in the buying and selling of goods and services - the 'real economy'. The rest is just gambling.

Third World : America's infrastructure is collapsing. There will not be any money to repair or replace the crumbling highways, neglected waterways, and long ignored electrical grid. A quarter of all US bridges should cause drivers to wonder, "Today?"

Bad Idea #47: FDIC chair Sheila Blair wants the government to guarantee mortgages that are headed for default, with the goal of getting mortgage holders to accept a loss and renegotiate the loans. You first.

Close Cropped : Synthetic fertilizer production isn't keeping up with demand. Prices are up 300% in the last year. Shortages abound. In Iowa, those who order 10,000 tons will be lucky to get 3,000... Wait a minute. Ten thousand tons? What are they doing to the land out there in Iowa?

Imagination: Global warming is a myth, at worst it will be a 100 years before we need to worry. Etc. But NOAA says hurricane activity is up 75% since 1995. Chance.

Christmas Dinner: The world's economies are based on debt. Payments must be made on this debt. If cash on hand runs out, the debtor must sell assets. Eventually the next ratchet on the credit rack leads to a rush to sell Treasuries for cash or hard assets (gold, silver, whiskey). When the Chinese and Japanese and Saudis get around to liquidating Treasuries, the goose will be done.

Banging the Drum: Reminder: one day we'll want to buy another tank of gasoline, but we can't buy what they can't (or don't) export: Mexico's exports are down 16%, Venezuela down 10%, Norway down 9%, Russia down 6%.

Porn O'Graph: Stand and deliver. Or not.

Thursday, October 23, 2008

SAR #8297

If the free market works, why isn't it?

Beggar Thy Neighbor: OPEC's problem with reducing oil supplies to raise prices is that each nation needs oil revenues to survive. If oil drops by 50%, they need to sell twice as much - not less to prop up the price at less than their budgets call for. Let the other guy sacrifice. Sound familiar?

Test Driven: The global auto market may "collapse" in 2009, says J.D. Power and Associates. Not slowdown, collapse.

Put a Fork In It: Argentina plans to seize $29 billion from private pension funds to fend off default on its international debts. Let's hope Paulson and Bernanke are a bit more subtle.

R for Redundant: Congress is considering establishing (another) domestic intelligence agency, to specialize in rooting out terrorists, spies , abortionists and Jon Stewart .

Oh, Look! See The Dog: Mervyn King, Governor of the Bank of England, "Not since the beginning of the First World War has our banking system been so close to collapse."

Diaper Economics: More people are buying supplies of diapers and baby formula around paydays, and for cash. Wal-Mart says this is a sign that customers are shopping less, have run out of credit and are cutting back, way back.

Great Leap Backward: China now emits about the same amount of greenhouse gases as the US. By 2030 it will emit CO2 equal to about 4 billion tons of carbon, compared with global emission of 8.5 billion tons today. Party on.

Calpers Model: The California Public Employees' Retirement System has lost over 20% in the last quarter. Still, beats the Argentinian solution.

The Muslim Candidates: The Extremism Unit of Great Britain's Prison Service will undertake to cure Muslims of their fanatical beliefs through "de-programming" and other brainwashing techniques. Where're Stanley Kubrick and Malcolm McDowell?

Spin's In: When Obama sweeps into office with a Democratic House and Senate behind him, it will be because America is a conservative nation. Yep, the commentariat are already on the practice field.

Early Days: Wachovia has taken the lead as the Biggest Loser with $23.7 billion in 3Q losses. Not bad for a middle-weight; let's see what the big guys like Citi and UBS can do.

Ghost at the Table Pump: Many Americans, seeing gasoline fall to $2.75 and less, think the oil problem is all over. Wrong .

False Profits: Instead of the promised land of high returns, CDOs are inflicting losses of up to 90% on investors. These losses will exceed the $660 billion loss financial firms took on sub-prime backed securities.

Freedom to Suffer: John McCain sneers at the idea that health care is a basic human right to be provided and regulated by the public in a civilized nation. McCain backs the GOP idea that it is commendable to make a profit from pain and suffering.

Pay, Pal: Last spring the developed countries promised to give $12 billion in food aid to the less fortunate nations. So far less than $1 billion has been forthcoming, which is actually an improvement over previous broken promises.

Porn O'Graph: Credit where credit's overdue.

Wednesday, October 22, 2008

SAR #8296

The problem with capitalism is capitalism.

Simpleton Math: Warren Buffet claims that cash equivalents (US Treasuries) are "a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value." The poor suckers who have held 3-Month T-bills for the last 8 years have a total return of 31%, while those who invested in Big Board stocks lost 28% and those who chased stocks on the NASDAQ are down 67%.

Desperadoes: The American public wants, and now. That's what got us in this mess. And they want the credit mess done and the recession over, sunshine in every pot, and soon. Tomorrow, if not later this afternoon. Take a deep breath and hold it. Okay, take another breath.

Two out of Three: The Arctic Ocean is getting warmer and less salty as sea ice melts. The Arctic is 9º F above normal. Global warming is a myth.

And Then Add ... To whatever total funding the Fed and Treasury are handing out to all comers these days, add another $600 billion to underwrite private purchases of toxic paper held by money market funds. I've lost count, but the total's got to be over $2 trillion. Question: What happens when they discover that none of this is going to work for long?

Genius: Kerkorian is taking a 66% loss on a billion dollar whack at Ford. Makes me feel better. Not smarter, but less alone.

The Shouting: Sub-prime foreclosures will be tapering off in 2009, giving the false sense that the worst is over. Not so, Alt-A and Option ARMs will then begin failing and build to a crescendo in 2011.

Playing Favorites: Why so little outrage over Paulson's $125 billion "gift" to the Big Banks? AIG was put on a very short leash, why do Goldman Sachs and Morgan Stanley deserve preferential treatment?

Something Wicked This Way Comes: Even though oil prices have declined, overall input costs to farmers are at an all-time high. Farmers need loans and loans are hard to get. Expect less food, more expensive food, more volatility in supply and prices. And not just in third country markets.

Vaporware: The IEA says that "clean coal" is not around the next several corners. Little progress is being made on carbon capture and storage, not enough research funds are available, and it will never work anyway it only sounds good in the coal ads.

States Rights: Twich believes in states rights only if they are far enough right, elsewise the Federales should step in. Like banning gay marriage, gay sex, and certain vegetables.

Not Quite All The News: The headline reads "Californian who registered voters charged with fraud." It should read: "GOP firm continues fraudulent voter suppression." And yes, the guy works for McCain .

Shhh! It's a Secret: DARPA wants software to go through miles and miles and days and months of space based videotapes that will use face-recognition and other biometrics to identify, index and retrieve the information. Automatically. Means they can do it, and just need a way to be more effective at determining if that was you leaving the house the other day.

Convenient: Saudi Arabia's cumulative net exports from 2006 to 2009 will be more than a billion barrels less than they would have been if the Saudis could have maintained 2005's export rate of 9.1 mbd. Nice of them to forego a billion times an average of $80 or so a barrel. Or was it necessity?

Porn O'Graph: Standard and poor performance.

Tuesday, October 21, 2008

SAR #8295

The reward for stupidity, greed and incompetence

should be bankruptcy, not bonuses.

Trees in the Forest: Today is pay-up-day for those who wrote some $360 billion in guarantees for Lehman debt. Of that face amount, the experts say so much cross betting took place that the loss will only be $6 billion net, which seems most incredible to me. Today we'll see if it's true.

Transparency: Paulson hired the Bank of New York Mellon to manage the $700 billion bailout. The administration declines to say how much the taxpayers will be paying Mellon.

Emendations: Bush is at it again, rewriting the Constitution. Madison's original version did not include the part where the President gets to decide which parts of laws he has to follow. The latests one he didn't like said he couldn't use any of the Pentagon's funds "to control the oil resources of Iraq".

Numberology: As part of the clever government plan to get banks to trust each other more, the SEC has interpreted accounting rules to let banks keep pretending that worthless paper is worth whatever they want to pretend it is worth.

Another View: Two former MI5 heads view the US response to the 9/11 attacks as a "huge overreaction... to what was "another terrorist incident" not much different than any other, except for the narcissistic over-reaction by the Bush administration and the subsequent rush to dictatorship.

Taxable Truth: The GOP is traditionally claimed that taxes are too high on corporations, that to generate jobs taxes on corporations should be lowered. McCain bleats this regularly. The GAO says that most corporations do not pay any income taxes. What is lower than zero?

Peeking at Oil: Exporting oil companies must first meet the needs of their populations, which reduces the amount available for export. Mexico is instructive: Since reaching peak production in 2004, Mexico'ss production has dropped an average of 5.4% a year, internal consumption has risen 1.2% a year, and exports have dropped 16% a year. In 2008 exports (mainly to the US) will decrease by 28%.

Could the US election be stolen? Wrong question. It should be: Will the US election be stolen again?

What Have I Done For You Lately ? The IEA says it would be irresponsible of OPEC to cut oil production, for it might hurt chances of a early economic recovery. The agency did not comment on the effect of low prices on the stability of oil-producing countries.

Petri-dish: Perpetual growth is not possible in a world of finite resources. We need an economic system that will let us live within our means, instead of a system based on unsustainable growth.

Capital free capitalism: The US is $10 trillion in debt. US banks are insolvent. Business are folding because they can't roll over their debt. The ordinary citizen can barely make minimum payments on the credit cards that have supported the whole circus for a number of years. This is not capitalism; no one has seen any capital in years. This is creditism.

Becalmed: The credit crunch is leaving wind generating projects blowing in the wind.

Once Upon A Time: Deregulation and privatization would pave the streets with gold, they said. Instead we got chaos, catastrophes, wars, and a financial crises that threatens to become the end of times. But the elite who caused it are still making out. Bush was, for them, a great success.

Monday, October 20, 2008

SAR #8294

And the band played on.

Nutshell: Oil production plateaued in 2005 and cheap energy went away. The economy depends on constant growth to stay afloat (that's the problem with capitalism coupled with fiat money). Everything in the economy depends on oil, preferably cheap oil. No growth, no new production to turn into interest to pay the loans. And so on. Slow growth for a while is a recession. No growth for a longer while is a depression. What comes next is Peak Everything.

Taking Sides: China will help Pakistan build two nuclear power plants to help with its energy crisis. The US has signed a cooperative nuclear agreement with India.

Save Me! Now that we the citizens own the banks, why are we paying our employees outrageous bonuses and ridiculous salaries to continue working in companies they have ruined? One of our latest acquisitions, Morgan Stanley, has paid out $10.7 billion so far this year, which is more than its outstanding stock is worth. We've given away the company.

Goose / Gander: The 50% drop in crude oil prices are being cited as proof that $147 oil was the result of a speculative bubble. Does the 40% drop in the world's stock markets prove they were all nothing but speculative bubbles, too?

Triage: Why isn't the bailout working? Because banks don't trust each other. Giving them more capital while letting them continue to hide their mistakes in the cellar will not cure insolvencies. Without triage there is no basis for saving the savable and burying the dead.

Hurry, Hurry, Going Out of Business! As a parting gift to Big Coal, the Cheney administration intends to further ease the already weak rules controlling dumping mountaintops into local streams.

How Come? Saudi Aramco has moved upgrading Manifa and Dammam oilfields to the top of the priority list, because planned production increases at Shaybah have been postponed due to rising costs. Why rush to increase any production with world prices and demand crashing? Tell me again how Peak Oil is a myth.

Hush : Last week the federal government announced it will guarantee up to $1.4 trillion of private investments. In banks, this time. Pizza parlors, soon.

Take a Deep Breath: Subprime has done, or at least set in motion, most of the harm it can do. The second wave of mortgage collapse, the Alt-A and Option mortgages start warming up in about a year and will make 2010 a year to remember.

Headline Only: "Six Wall Street Banks to Distribute 10% of the $700 Billionn Rescue as Pay and Bonuses for This Year's Performance"

Wash Out Your Mouth: Unemployment is rising and capital markets in turmoil, commodities from oil to corn to wheat have crashed; "pretty much everything points toward deflation."

10 Little, 9 Little... The Dutch have nationalized ING, so now there are zero commercial banks in all the West. When any and all of the nationalized banks in the US, UK and Europe go belly up, the taxpayers will have to make their markers good. Some casino.

True or False: The following are known to be in deep financial trouble: Argentina, Australia, Austria, Brazil, Bulgaria, China, Ecuador, Estonia, Hungary, India, Indonesia Kazakhstan, Latvia, Lithuania, Pakistan, Romania, Russia, Serbia, Spain, Switzerland, South Korea, Turkey, Ukraine, United States.

Here Piggy Piggy: As the price of gasoline plummets, ethanol becomes less and less competitive. No problem, the ethanol firms are petitioning the government to mandate a doubling of the ethanol content of gasoline.

Getting Rich, Not: Remember the bonanza that Canadian oil sands promised? They are not viable with oil below $80 a barrel. By the time the boiler room guys revive this one the stuff'll be back to being tar sands.

Porn O'Graph: Trailer for sale or rent...

Saturday, October 18, 2008

SAR #8292/3 Weekender

Americans have difficulty embracing the concept "reality."

Good News / Bad News : Oil prices have plunged. So has gold. And the stock market. Deflation, anyone?

Quote: "All signs point to an economic slump that will be nasty, brutish — and long." Paul Krugman. Are you sure that Warren's not off a bit on his timing?

Lean, Two: There were 544,000 single-family housing starts in September, lowest leavel since 1982. And only 532,000 permits were issued, suggesting even fewer starts next month.

Tapped Out: BP's head of exploration and production says the world's oil companies may have reached the peak of their ability to extract hydrocarbons. Not the same as Peak Oil; worse. For how much you have in reserve is not near as important as how much you can put on the table today. And tomorrow.

World Food Day: The World Bank estimates that 1 out of 6 people in the world are malnourished.

Actually: Plan A was to buy toxic paper and hide it. Plan B is to force-feed banks like geese. Plan C will be whatever it takes to extend and consolidate Paulson's power over the US economy. Fixing the problem is not the goal, controlling the country is.

Wedding Plans: Merger talks between GM and Chrysler continue. Banks and other lenders are eager to see them tie the knot - especially the banks that still hold those Chrysler pier loans.

Nixon went to China: After trying to drown the US government in the bath for the last quarter century, the GOP has ushered in the largest expansion of government entanglement in the economy since Roosevelt.

Belly Up to the Bar: First it was banks, then primary dealers, the auto makers and then the auto loan folks. Now the monoline insurers want a teat to suckle.

What Have You Done For Me Lately? First AIG got $85 billion. Then, a few days ago, it got another $38 billion and didn't even tell us what they needed it for. Now they want a place at the Fed's commercial paper trough.

Un-Funny Joke: Zimbabwe's inflation rate now exceeds 200 million percent. A loaf a bread would cost $Z400 billion, if there were bread.

Silly Logic: An "intellectual conservative" wonders at the US pumping 10% of the world's oil supply from only 3% of the world's oil reserves, and thinks this is a Good Thing.

Tradition: Critics say the Bank of England will have to lower borrowing rates to 2% or even lower - which would be lower than at any time since 1694.

Scrooged: Lawrenceburg, TN is asking employees to take unpaid time off over the holidays, because the city doesn't have the money to pay everybody. It'll give them time to practice for the Christmas play.

Porn O'Graph: Paying the Bills

Friday, October 17, 2008

SAR #8291

Let's finish what Roosevelt started.

Same Old Same Old: No, it's not over yet. Economists suggest that house prices will probably fall through 2009, longer in some areas. The recession's impact will stretch far into the future.

Pre-Shrunk: What's left of producing real things in the US - factory output, mines, utilities - nosedived nearly 3% last month. No, not more outsourcing of everything. Simple slowdown, this time. Pretty much it's the little engine that simply can't pull all the computer gazers on Wall Street out of the hole they've dug.

Neighborhood Watch: Pakistan has turned again to China for economic help. The US offered to send more cruise missiles.

That Old Time Religion: Jamie Dimon, CEO of JPMorgan, says that they have reverted to "old fashioned" loans capped at 80% LTV after verification of income and honest appraisals. In California, Nevada, and Florida Morgan is requiring 35% down payments.

Musical Chairs Car Sales: Auto sales for 2008 are projected to drop 16% from 2007, and then to fall another 11% in 2009. Chrysler seems to be the one without a chair.

Lesson The First: Regarding depression, or just a long and deep recession, the first lesson to be learned is that we are not as smart as we though, nor are we as wealthy as we pretended. While peak oil played a role, as did food prices and insecurity, the real crisis is economic: the economic system we have tolerated for the last couple of decades is unfair, unstable and seriously flawed. Yet we're letting the Usual Suspects put the damned thing on life support.

The Next Shoe: S&P estimates foreclosure losses on $280 billion in Alt-A loans at 40%. How is getting the banks to lend yet more money supposed to prepare them for these losses?

Don't Quote Me, But: The NY Times has finally figured out that US house prices must fall another 15% - 20% before this episode is done and stability returns to the real estate markets. This is based (as you've read here repeatedly) on a return to the once-traditional 20% down and 3x earnings standard to get a loan, and price increases that kept step with inflation. Convincing people that a house is a home and not a perpetual ATM machine will be a slow process, insulting to egos and damning to the economy.

Not Tonight, Darling: As the price of oil falls below $70 a barrel, the enthusiasm to 'drill here, drill now' is evaporating. Oil companies have lost both access to the credit needed fund drilling programs and the interest in doing so. It would cost more to lift the oil than they'd get for it at today's prices. You can also buy ethanol plants in Iowa at 2 for 1 auctions.

Fractions: To date the financial sector has admitted losing $637 billion. That is (a) big money at my house, (b) halfway to the IMF's expected $1.4 trillion or (c) one quarter of the way to Roubini's estimate of $3 trillion.

So this is News? A Federal Judge has ruled that the GOP plan to use a list of foreclosed home addresses to challenge voters is illegal. Hasn't stopped 'em before.

Bataan: Over $40 billion was withdrawn from US hedge funds in September . The actual total is much larger because the majority of hedge funds are based in London, not the US, and most funds have a 45 or 90 day delay on redemptions. Those in the hedge fund industry view the period between now and the end of the year as "a death march" as investors scramble to get their money back.

Porn O'Graph: Retail sales, or not.

Thursday, October 16, 2008

SAR #8290

If you are not angry, you have not been paying attention.

Brazen: AIG, the 80% federally owned insurance/financial services giant, is spending money lobbying states to relax the newly imposed controls on the mortgage industry. They promise to be really, really careful this time.

Whether Report: Boy, that was short lived, The Dow falls down the steps, our new TARP is flapping in the wind, Term Auction Facility's running a $900 billion fever and the economic bad news has just started.

Hydra: The US Military-in-Iraq yesterday made its scheduled semi-annual announcement that the Number Two leader of al-Qaida-in-Iraq has been killed.

Lies, Damn Lies, & Oil Stats: Again this month you get to choose: OPEC said its members produced 1.75 million barrels a day more than the US EIA cites.

Below Zero: New York State manufacturing fell off the table in October. The Empire State Manufacturing Survey of general business conditions dropped 17 points to a record low of minus 24. A record, of course. Life support is indicated.

Groundhog Day: So we're going to fix the problem by injecting billions into banks so the people who created the problem can make more bad loans? The looting of the Treasury will continue until the current crew in Washington leaves town.

Kicking the Tires: Ford Motor Credit, GMAC, Cerberus Capital and other automobile finance firms are asking for a place at the trough. They want to sell their bad paper to the Treasury, too.

Only Looking: GMAC only wants to limit its sales to that 60% of the population who have credit scores above 700. The new Chevy model is the 701.

Home For Christmas: The draft Status of Forces Agreement with Iraq requires the US to have all of its troops out by the end of 2011. The fine print says...

Another Failed State? The US National Intelligence Estimate for Pakistan has a rather succinct summary: "No money, no energy, no government." Details to follow.

Essay Question: Why is the government putting billions into these particular banks without taking a permanent equity stake, when it put up no cash at all for Fanny, Freddie, Washington Mutual or Wachovia - and wiped out nearly all stockholder equity? Paulson...

Back At The Ranch Front: The Taliban have become strong enough to launch attacks on well defended provincial capitals. The UN reports that Taliban attacks are at a six year high. British military leaders now concede that the Taliban are undefeatable.

Roller Coaster! The increase in the price of oil lead to the decrease in the price of oil. This price oscillation will repeat repeatedly as we make our way to, through and down the far side of peak oil.

Tibet Valley Authority: China plans a string of 750 hydroelectric dams across Tibet to provide power to the region, while putting to good use the runoff from glaciers melting due to global warming.

Budget Process: Nigeria has scrapped its proposed 2009 budget and begun working on one that reflects the new international price of oil. Things must be eliminated, mostly social programs, in that graft is constitutionally protected.

Porn O'Graph: Dry, very dry - Baltic Dry.