Monday, May 31, 2010

SAR #10151

Fear sells.

We've only just begun:  However much oil is leaking into the Gulf – and it is clear that 5,000 bpd was always laughably low – it will probably keep on keeping on for another 75 days or so.  By then it will have reached Florida, the Keys, Palm Beach, reached far into the food chain and poisoned it for years.

Mission Creep:  The US has now spent over a trillion dollars on the wars in Afghanistan and Iraq. Afghanistan is the longest war in our history, Iraq, second.  What have we gotten that was worth the money, worth the blood?

The Best Defense: Transocean says its liability in the Deepwater Horizon disaster should be limited to $26.7 million, because there is no evidence “of any contamination from the rig itself.”  And also because BP hasn't been paying the rent on the rig since it capsized and sank. Transocean didn't mention that the rig was over-insured and they made a couple of hundred million on the insurance settlement.

Another Country:  Marijuana workers in San Jose are unionizing. Oakland plans to tax the crop.

Censorship:  Media organizations claim they are encountering passive censorship as it becomes more and more difficult for reporters to investigate the oil spill “on the ground”.  We would tell you about it, but we're not allowed to.

One Big Happy:  Having learned that General McCrystal wants to fight the Taliban in Kandahar without fighting the Taliban in Kandahar, military planners are working on a unilateral strike against the people in Northwest Pakistan, near the Barg-e-Matal district of Nuristan, Afghanistan, where the Taliban have over-run the district and taken control.

Dateline:  Scientists in Mexico claim to have found the horniest dinosaur.

Canard:  Not only does money not buy happiness, it ruins the simple pleasures in life. Once basic needs are met, more money has little effect on the enjoyment of life. I keep telling my wife that, too.

Fault Line:  The root cause of the housing bubble is still firmly in place. Now it is Freddie and Fannie and the FHA that are enabling the banks to extend doomed loans to the unqualified.  Mortgage lenders are happy to collect their fees as the government underwrites and guarantees 99% of all US mortgages, while the Fed has sopped up $1.2 trillion in unsound MBS. The default rate on FHA guaranteed loans (which is most of 'em) is now 20%. The government is willing to write off (bill the taxpayer for) 1 out of every 5 mortgages – within a year of origination.  Gotta go now, don't want to be here when the wheels come off.

Opinion Poll:  Everybody but JPMorgan thinks the markets are going to crash.

Memorial Day:  As has been known but not commented on publicly for years, most of the prisoners at Guantanamo have been low-level fighters or simply hapless fellows that someone wanted gotten out of the way – or were 'named' just to get the reward.  The Guantanamo Review Task Force reports that only 10% of the Gitmo detainees were ever “leaders, operatives and facilitators involved in plots against the United States.”

Cup/Lip:  For years it was official US policy, encouraged by the seacoast states, to prohibit drilling along the continental shelf while encouraging (and subsidizing) deep offshore drilling.  Out of sight, out of mind.  How's that working out?


john patrick said...

Thanks again, CK, for running the daily blog. Much appreciated.

john (chicago)

Demetrius said...

If the oil keeps coming and gets into the Atlantic Conveyor what happens next?

Charles Kingsley Michaelson, III said...

Demetrius - Oh, wow. I did not think it out that far - but as it gets carried through the Florida Straights it will be in the Gulf Stream... all the way to Scotland? Depreciating how many fisheries?

You are the first I've seen to bring this up. Very worrisome.


mistah charley, ph.d. said...


Randy Newman has some song lyrics that come to mind:

"They say that money won't buy you love in this world
But it does get some cocaine and two fifteen-year-old girls
And an air-conditioned limousine on a hot September night
And that may not be love - but it's alright"

He writes with satirical intent, I hasten to add.

But seriously, if money doesn't add to your happiness once your basic needs are met

- and if your basic needs, as one enters one's declining years, are security of food, shelter, and medical care

- how many people can really be sure of having enough money that they won't die in the street like a dog?

Not as many as used to think so.

And that's only if Business As Usual continues (another quote from a contemporary songwriter: "The trouble with normal - it always gets worse" - Bruce Cockburn). What if these people talking about serious declines in the affordability and/or availability of fossil fuels in the not-too-distant future are correct? At The Archdruid Report, John Michael Greer writes: "Not one significant policy maker or mass media pundit in the industrial world has begun to talk about the impact of the end of the age of abundance; it’s an open question if any of them have grasped how fundamental the changes will be as the new age of post-abundance economics begins to clamp down. Most ordinary people in the industrial world, for their part, are sleepwalking through one of history’s major transitions. The issues that concern them are still defined entirely by the calculus of abundance. Most Americans these days, for example, worry about managing a comfortable retirement, paying for increasingly expensive medical care, providing their children with a college education and whatever amenities they consider important. It has not yet entered their darkest dreams that they need to worry about access to such basic necessities as food, clothing and shelter, the fate of local economies and communities shredded by decades of malign neglect, and the rise of serious threats to the survival of constitutional government and the rule of law."

Dink said...

"the government underwrites and guarantees 99% of all US mortgages, while the Fed has sopped up $1.2 trillion in unsound MBS."

So when the borrowers default, ownership goes to the lienholder (Fed Reserve Bank? US Gov?), yes? How are they going to fairly redistribute the housing? Can a solvent foreign nation buy all the titles for pennies on the dollar?

@MC, PhD
That was some spine-chilling stuff.

EconomicDisconnect said...

While nothing like the real disaster in the Gulf, forest fires in Quebec are bad enough for the wind to push the smoke all the way down to me in Massachusetts! My eyes are kiling me and I thought it was a local burn, not all the way from Canada.