SAR #10055

Remember, in politics perception beats reality.

Mission Impossible:  The objective of the current military campaign in Afghanistan's poppy capital is not the Taliban, not the poppies, and not establishing democracy (whatever that might look like when decanted from a Humvee).  It is, according to senior military officials, to win the hearts and minds of the American public and to convince them to back another five or six years of war.  The death of 1,000 US soldiers hasn't drummed up much support.

Problem, What Problem?  In the fourth quarter of 2009, the number of banks on the FDIC's problem bank list jumped 27%, to 702 banks with assets totaling $402 billion.  The FDIC says the deposit insurance fund is now $20 billion in the hole – and that's after raising $46 billion through the program that forced banks to pre-pay their premiums through 2012.  Now when banks fail the depositors won't lose their money, but they'll just have to give it back to Uncle Sam via taxes to cover the payments.

Who's On First?  AIG documents – that the Fed kept secret for over a year – reveal that Goldman Sachs originated most of the CDOs that brought down AIG.  After they sold the CDOs and knowing they would fail, Goldman then used their insider knowledge to stick AIG with the CDS to cover the loses they knew were coming. “Slithering” was the descriptor used.

Just In Time:  Just as it was looking like Peak Oil Production had arrived, the cornucopians discovered it was really Peak Demand.  So the stable production from 2005 forward is now explained by claiming that price has nothing to do with demand, it's just that modern economies no longer need as much petroleum.  Is that whistling I hear, over by the graveyard?

Sturm und Drang:  Niall Ferguson says that (A) US debt levels are unsustainable, (B) US debt will never be repaid, but that A and B do not matter as long as (C) we all pretend we've not figured out A & B, because when we reach C, (D) the empire may collapse suddenly – due to excessive debt.  It has, he says, happened many times before.

Dueling Banjo's:  Either the 20-city Case-Shiller index fell 3.1% last year, or home prices in 20 U.S. cities rose in December for a seventh consecutive month, indicating the recovery is well under way.  Your choice.

Size Counts: In Missouri – where school budgets, women's shelters and child-care subsides have been cut - it still pays to buy the bigger boat.  A yacht, if possible.  They are tax exempt, while bass boats are not.

Flushed: Subtropical waters – think Gulf Stream – are flowing along Greenland's coasts reaching Greenland's glaciers, accelerating the loss of ice. These increased warmer currents might also warm methane hydrates on the continental shelves, speeding their release.

Perspective:  Goldman Sachs says that the amount of Greek debt they helped manipulate – 2.36 billion Euro - was “a rather small amount.”  True, true.  Remember that Goldman only got $300 million for this bit of skulduggery, “a rather small amount” compared to their $16.2 billion in bonuses last year.

'Gonna Take My Ball And Go Home:  Shell has told Nigeria that any oil industry reforms that cut into profits would force the oil majors to leave the country, leaving it with no oil income instead of the pittance they now get.

They Hold Their Noses:  There are over 100 Republicans running around criticizing Obama's stimulus and insisting that it produced no jobs while conveniently forgetting that they rushed up to the trough and took as much money as they could. Even Schwarzenegger wonders how they can do this.

Is It Twilight Yet?  The era of sustainable capacity from Saudi Arabia's vertically drilled oil wells ended about 1990.  The era of sustainable production from their horizontal wells ended in 1997... In 2003, Saudi Aramco switched to Maximum-Reservoir-Contact wells.  Now the MRC's are out and the Saudis are pumping CO2 into the reservoirs to force out the last dregs.  The law of diminishing returns doesn't seem to play favorites.

Reading Assignment:  A paean to Palin.