DrumBeat: January 28, 2007
Posted by Leanan on January 28, 2007 - 9:27am
Topic: Miscellaneous
Last warning: 10 years to save world
The world has just 10 years to reverse surging greenhouse gas emissions or risk runaway climate change that could make many parts of the planet uninhabitable....The results could include the destruction of the Amazon rainforest and the Great Barrier Reef, the forced migration of hundreds of millions of people from equatorial regions, and the loss of vast tracts of land under rising seas as the ice caps melt.
Bush Orders Federal Agencies to Slash Energy Consumption
President George W. Bush Wednesday issued an executive order requiring federal agencies to cut their energy consumption, shift federal fleets to alternative fuel and plug-in hybrid vehicles, and expand procurement programs for environmentally friendly products.
The Long Road to Energy Independence
Last year, the United States imported 60 percent of the oil it consumed. If, as Mr. Bush proposes, we cut gasoline consumption 20 percent by 2017 — about 2.1 million barrels a day — then the share of oil imported will fall only by 4 or 5 percentage points.
China vs Japan: FTAs, Oil and Taiwan
The growing competition for oil particularly in East Asia between China and Japan is dragging Taiwan leading to saber-rattling by both countries. The role of Taiwan in this equation adds heat into this growing rivalry that also has military implications.
Facts and impact of oil on Sudanese domestic and International relations
Since its independence of Britain and separation from Egypt in 1956, Sudan has enjoyed only 11 years of relative stability and peace. The oil discoveries in Sudan, in the late 1970’s have additionally aggravated the political and economic situation in Sudan. The oil discoveries played a pivotal role in igniting the second civil war in 1983 and complicated the possibilities for peace between the south and north as it became the central objective for the fighting parties.
With Apologies, Nuclear Power Gets a Second Look
At a time when industrialized countries are wrestling with how to curb carbon dioxide emissions, nuclear energy has one indisputable advantage: unlike coal, oil, natural gas, or even biological fuels, it emits no carbon dioxide. That virtue, in the view of advocates, is enough to offset its well-documented shortcomings.
The U.K. needs nuclear power to meet its twin challenges of securing energy supplies and reducing emissions of gases that cause global warming, Prime Minister Tony Blair said.
Ukraine plans to raise uranium output to lower energy cost
Ukraine plans to increase its annual uranium production to 1,400 tons within a period of three years, up 75 percent from the current 800 tons, Energy Minister Yuriy Boiko announced on Friday.The increase is part of a 10-year plan to lower the cost of nuclear power generation, the minister said.
The search for our oil and gas
The biggest offshore oil and gas drilling effort New Zealand has seen is about to begin.
UN's vast report will end the scientific argument. Now will the world act?
Three year study by panel of experts published this week will kick off tortuous negotiations on new emissions treaty to replace Kyoto agreement in 2012.
Rep. Roscoe Bartlett: Energy resources and our future
Introducing the “Cash-Back Plug-In” Concept
Even more compelling is what he calls PHEVs: “The Cash-Back Plug-In Car.” He shows annual fuel costs: $1,200 for a conventional car, $720 for a hybrid, $495 for a PHEV. Next come the important new numbers. After paying for fuel, CAR OWNERS GET $425 NET ANNUAL PAYMENTS for a Cash-Back Plug-In Car that provides “spinning reserves” to utilities (relieving them of having to maintain plants ready to kick in for unexpected demand). And CAR OWNERS NET $2,790 by providing both spinning reserves and “regulation services” (helping utilities maintain the system voltage within narrow ranges. (Not calculated are revenues for providing peak power!)
Wrestling with how to best heat and cool an expansion to the company's 4,500-square feet of office space, Mark Bancroft, company president, eventually settled on digging a 10-foot hole in the ground.
China admits to climate failings
With a fifth of the world's population, China consumes only 4% of the world's daily oil output, importing about three million barrels a day. |
 |
We can empower ourselves to be less helpless. Get rid of debts that make you paranoid about job loss, illness or injury. Learn to live on a smaller salary (the average low six-figure income earner would be in financial crisis within a month if that income suddenly ceased). Become less dependent on the electrical grid and on heavily-subsidized oil and food prices. Take charge of your own health so you're not dependent on your doctor for every little thing that happens (and so that fewer little things do happen). Build up your critical technical and social and thinking skills (see the mindmap above), and build reciprocal relationships with handy friends and neighbours, so you don't have to run to the yellow pages or the store every time something breaks down, wears out or falls apart. Buy fewer and more durable things, so they don't break down as often. Learn to 'make your own'. Have fewer possessions that need huge amounts of space and maintenance. In general, make yourself more self-sufficient and resilient and less dependent on others and on infrastructure that can break or break down.
Expensive, wasteful ethanol can't solve our problems
According to the president, ethanol is the magical elixir that will solve virtually every economic, environmental and foreign policy problem on the horizon. In reality, it's enormously expensive and wasteful.
Kudos for Seeing the Problem. Now Do Something.
Ethanol euphoria is out of place
It is clear that if we do not pay for ethanol at the pump, we will pay for it at the supermarket. Farmers I have spoken to are enjoying the high prices but are worried about the long-term impact on agriculture. Particularly, farmers wonder what will happen if cellulose can be converted into fuel. They fear soil depletion when they do not have corn stalks and other waste to plow back into the fields.
Although global warming and sustainability have become increasingly common in sermons, not many have included peak oil.
Local lawmaker between coal and a hard place in power plant battle
Protests are planned, lawsuits are pending and the debate continues to rage over one of the hottest issues currently facing Texas: the state’s increasing appetite for electricity and a proliferation of coal-fired power plants proposed to meet that demand.
My Turn: Bush's reign of terror
When Vice President Dick Cheney convened a secret meeting of energy industry executives and government officials in early 2001, it's quite likely that the problem of peak oil was at the top of the agenda. To deal with the problem he apparently only seriously considered one alternative strategy -- taking control of the Middle Eastern supply of oil. His challenge lay in finding a politically correct way to present the idea to the American people and our allies. The 9/11 attacks provided the perfect solution. By placing all of the blame for 9/11 on Muslim fanatics and trading heavily on Americans' fear of terrorism, Team Bush paved the way for a global war with Islam -- a war against Islamofascists. The real target was not Muslims, but rather their oil.
Korean Air overbidding for S-Oil stake
Korean Air and its affiliate Hanjin Shipping Co. have jointly sought a stake in the nation's third largest refinery amid rising oil prices.
Energy crisis as power cuts loom
SCOTLAND is on the brink of a power crisis after an accident at one of the country's biggest electricity plants massively reduced supplies to the national grid.Emergency legislation will be rushed through the Scottish Parliament early this week to allow Longannet power station, Fife, to burn gas as well as coal in a bid to stave off potential blackouts.
Why life after oil will be better
EXPERTS are predicting that in as little as 12 months' time our global supplies of oil will start to diminish. Demand will exceed supply, prices will rise, and suddenly all of the things we take for granted like commuting from Swansea to Cardiff, buying roses in February and holidaying abroad will be out of the question.Having achieved a global economy which is dependent on mass production and the mobility of its work force, the change could render us back to a relative dark age where people live and work in small, self-sufficient communities.
A doomsday scenario? Not according to Patrick Holden, director of the Soil Association, which opened its annual conference in Cardiff yesterday.
Iraqis: Oil law won't favor Americans
Iraqi officials say a hotly debated proposed oil law will not favor Americans but acknowledge that foreign companies will be allowed to take their profits out of the country — an incentive to draw foreign investment.
Bolivia state oil company leader resigns
At a news conference late Friday, Ortiz said he had sent his letter of resignation to Morales, a leftist who has pledged to increase the state's role in the economy.
Blair highlights chasm between global intent and action
Prime Minister Tony Blair warned of "a yawning gap" between an understanding of global challenges like climate change and the capacity to deal with them.
Bush's Climate Remarks Weighed for Policy Shift
It was just a couple of dozen words out of more than 5,000, uttered so fast that many in the audience missed them at first. But President Bush's commitment to fight global warming in his State of the Union address this week has echoed around the world and provoked debate about whether he is shifting his view of climate change.
Solar home in Va. getting high marks
State Sen. Frank Wagner is staying warm at his temporary address, even in below-freezing weather and without a traditional power supply or fireplace.The Virginia Beach Republican, a proponent of alternative energy sources, is living for a week outside the Science Museum of Virginia in a solar-powered house designed and built by Virginia Tech students. He moved in Wednesday.
Bolivia state oil company leader resigns
The situation in Latin America is quite interessting. After Chavez in Venezuela, Morales in Bolivia there is now Correa (I think this is his name) in Ecuador. Alle of them regard themselves as leftist and try to gain more money from their (rich) national endowment with energy ressources.
Maybe I am not right, however, by focusing its international policy on places around the Persian Gulf, the US-american influence in Latin America weakened distinctly within the last 5 to 10 years. This is a clear sign, that the - let me call it - "empire" becomes weaker.
The new political self-confidence is certainly supported by the energy ressources, not only in Venezuela. The same pattern can be seen in Russia, which emerged again as a big power. Combine this with PO and there is a dramatically changed political landscape emerging with winners mainly the oil and natural gas rich places.
This is purely anecdotal, but I think most of Latin America had a reality check when the US and the IMF abandoned Argentina in 2001 and allowed the economy there to crash and burn. Most of Latin America has, to a large extent, lost faith in the US version of the global economy and they are seeking more independence. It just happens that the US is also distracted in the ME at the same time.
I used to live in Argentina and in the 70's and 80's and even the 90's the US Dollar was king. I was there for three weeks in 2003/04 and noticed that the euro seems now the preferred foreign currency for many. It seems as though many in Latin America and especially South America are looking to Europe and Asia and less to the US for investment and cultural influence.
As the traditional energy relationships blur, shift and find a new reality, I think we will see ongoing tremors and realignments in traditional global political and economic arrangements. Latin America will be no exception.
Prior to Argentina going south, the IMF and USA and its Lenders presented the Argentina Gov't with six point plan to clean up. Argentina was warned that its practice of using short term debt instead of the normal mix of short/medium/long term instruments was suicide unless it practised within Fiscal and Monetary Policy norms.
Argentina told the to F>Off.
Argentina refused to balance its Budget etc etc
Argentina's loans (almost all short term) were not renewed. Nobody trusted them. Argentina collapsed. Not because of defaults. But because they had lost Credibility with Int'l Lenders.
The IMF & USA & Int'l Lenders have used Argentina and some lesser known nations as examples. If u practice mickey mouse economics, don't come to us for MONEY.
Freddy,
Do you think Asia or Europe will do business with Argentina, then ?
Doesn't matter. Any new lender is dealing with what we might call a post chapter 11 entity. All the ratios are new since their currency devaluation and accumulation of usdollars for Reserves.
The IMF et al called Argentina's bluff. And Argentina had no Plan B.
They needed outside help three years ago, not now.
But the lesson is, when u have seen someone blowoff a lender, why would u get in line to get f*cked?
Hello Freddy Hutter,
I think that the United States of America is going to suffer a similar fate to that of poor Argentina. The rest of the world is becoming weary of supporting America's obesity and insatiable appetites. A day will come in which the United States of America becomes the fat man hogging the buffet without any prospects of paying his bill. The world will treat America harshly, and America will collapse, and the world will stand by and watch us suffer.
Mexico, Venezuela, Nigeria, and the Middle East should cease exporting oil to the United States of America. I suppose that all of these countries will, too, when the opportunity arises.
Until then, Americans will keep on living like Kings and Queens of the Universe on the money borrowed from the Chinese and the resources stolen from the impoverished people of the world.
The United States of America is the evil empire, now. It also will collapse like the other evil empire.
Such is the fate of the United States of America and the American people. Too bad for America.
David Mathews
http://www.geocities.com/dmathew1
David, i enjoy some of your posts but frankly i don't chat with president bashers, american bashers or idiots that don't understand what an empire is. Sorry.
Try asking a question that is vaguely related to Peak Oil.
Strange then - you do realize that most of the oil related professionals/those who have experience of other countries who post here (several of whom you reply to in copious quantity) believe that President Bush has been a true disaster for American interests - or do such fact based opinions not count as bashing, but merely acknowledging reality?
However, if you mean that political posturing or rhetorical emptiness is worth less than factual debate, I would agree.
And strangely, considering that the world's largest unarmed border is about to get armed boats (machine gun only and just a few, admittedly) on the Great Lakes for the first time since America last tried to liberate Canadian soil (pre-oil - since then, America has been very busy liberating people who just happen to have oil - ask the Iranians, who were able to enjoy monarchy again after irresponsibly exercising democracy, or the Iraqis, who have had bloody tyranny replaced with bloody chaos, to cover a good 50 years), will have passport controls implemented (wonder when the fingerprinting and picture taking will start, as with other good allies of America like Great Britain), and already decides who gets to fly into or out of Canada (the U.S. has actually turned back airliners which had passengers who were not landing in the U.S.), I would think you would have a few concrete points to 'bash' the U.S. with. Or are facts not bashing?
As for empire - tricky, tricky, question, but you have read your Thucydides, haven't you? The behavior and rhetoric of Athens through that period has a number of resonances to the America of today. Including the vast cleft between how the Athenians saw themselves, and how the rest of the Greek states experienced Athenian actions.
Pat, if u don't know history (by your comical empire defence), go to a history site. If u want to debate the ineptness of legislators, go to a political site. TOD was set up as a venue for the discussion of Peak Oil and while i appreciate that there are instances where we want to wander, it is no excuse for the ridiculous situation in which we find our forum this month where anything goes. It is very frustrating to go thru upwards of 300 post that are mostly musings ... not debate or discussion. And i don't mean just Drumbeat.
Well, Thucydides is a good historical reference (though I only read translations - I assume with your superior knowledge, you enjoy the classical Greek), and I left off the information about how the U.S. claimed its northern border ended at the 54th Parallel before 1846 (see this link - http://cvic.bc.ca/vancouver_island_history.htm - do note it is 'ca' which means Canadian propaganda) - after all, the U.S. set its southern border between 1846-1848 in a little thing called the Mexican-American War, which just happens to be one of those examples of conquest glossed over in American history books - however, do enjoy reading the information at http://en.wikipedia.org/wiki/Mexican-American_War. Ah, Manifest Destiny - I am sure, just like the members of the Athenian dominated Delian League, the entire world now supports American Manifest Destiny as being in their self-interest. As a quick link about the Delian League, http://en.wikipedia.org/wiki/Delian_League is quite good, especially with how the Delian League originated - 'They surrendered the leadership of the ongoing campaign to Athens, which was eager to accept it. The Delian League was inaugurated in 477 BC as an offensive and defensive alliance against Persia. The principal cities in the League were Athens, Chios, Samos, and Lesbos, but many of the principal islands and Ionian cities joined the league.' Seeing how the Peloponnesian War developed from that is fascinating - and do especially note the Melian Debate, to get a certain flavor of current American justifications for its actions (the link at http://www.wsu.edu/~dee/GREECE/MELIAN.HTM is fine for the purpose).
As for overflights, do read here - http://web.nbaa.org/public/ops/airspace/restrictions/2006/200608237435.p... or for a quicker overview, here http://web.nbaa.org/public/ops/faq/cache/120.html - do note the 'Are operating under an approved TSA aviation security program or have applied for and received written TSA authorization through the security authorization process.' which means a direct flight between Mexico City and Ottawa requires American approval of its passenger list. Cat Stevens won't be flying between those two capital cities any time soon, since Yusuf Islam is a very, very dangerous man in the eyes of the American government (http://www.cnn.com/2004/US/09/22/plane.diverted.stevens/).
As for Iran having a monarchy restored, to have that monarchy then in turn overthrown by theocratic mullahs, or Iraq being a bloody chaos, I'm pretty sure links won't be required.
And though you may have missed it, in the case of Iraq, Iran, Canada, and Mexico, I have just mentioned four of the world's largest oil exporters - or is the fact that all four of those countries have experienced American terms being dictated, whether 'covert' (Iran of the 1950s), 'overt' (Iraq today), or something along the lines of free association (NAFTA in let us say the 1980s) mean they have nothing to do with peak oil.
As you wish.
But at least in Germany, the understanding (and fear) of Ressourcenkrieg is just a part of a normal understanding of how the world works. And watching it happen in real time is just another one of those little diversions of 2007.
You may note the article above the Drumbeat about Russian gas - or is that sort of thing also not really relevant? I think that most TOD:Europe readers would disagree. And somehow, the TOD:Europe discussions seem full of factual information discussed in a fairly rational manner.
(edit - added the Cat Stevens info, corrected a couple of spelling mistakes, etc.)
I am not interested in discussing History and the definition of Empire with somebody that knows nothing about the topic except what has been gleaned at anti-american disinformation websites.
If u have a question wrt Peak Oil, i'm available. Bye.
As an American citizen, whose mother worked for the CIA and whose father worked for the NSA, I find it fairly amusing to be told that the overthrow of a democratically elected leader in favor of a monarch to rule an oil rich country is a figment of some anti-American web site, or that such historical information has nothing to do with peak oil today. If you actually know any Iranians (I have known Persians, Assyrians, and Armenians from Iran, and Americans who worked in Iran training military units and worked in the oil fields - the country is quite interesting, actually, and what Iranians can do with rice is fantastic), ask them about such unimportant and utterly irrelevant historical trivia in terms of how they view current events, especially in light of the fact that Iran seems quite honest in accepting the fact that the oil will run out, regardless of what anyone else may think about it.
As it seems unlikely you read any of the links provided to such anti-American web sites as Wikipedia or CNN, here is an excerpt from a debate held about 2500 years ago, written by an Athenian -
Melians-
It may be your interest to be our masters, but how can it be ours to be your slaves?
Athenians-
To you the gain will be that by submission you will avert the worst; and we shall be all the richer for your preservation.
Melians-
But must we be your enemies? Will you not receive us as friends if we are neutral and remain at peace with you?
Athenians-
No, your enmity is not half so mischievous to us as your friendship; for the one is in the eyes of our subjects an argument of our power, the other of our weakness.
Melians-
But are your subjects really unable to distinguish between states in which you have no concern, and those which are chiefly your own colonies, and in some cases have revolted and been subdued by you?
Athenians-
Why, they do not doubt that both of them have a good deal to say for themselves on the score of justice, but they think that states like yours are left free because they are able to defend themselves, and that we do not attack them because we dare not. So that your subjection will give us an increase of security, as well as an extension of empire. For we are masters of the sea, and you who are islanders, and insignificant islanders, at that, must not be allowed to escape us.
Melians-
But do you not recognize another danger? For, once more, since you drive us from the plea of justice and press upon us your doctrine of expediency, we must show you what is for our interest, and, if it be for yours also, may hope to convince you:, Will you not be making enemies of all who are now neutrals? When they see how you are treating us they will expect you some day to turn against them; and if so, are you not strengthening the enemies whom you already have, and bringing upon you others who, if they could help, would never dream of being your enemies at all?
Athenians-
We do not consider our really dangerous enemies to be any of the peoples inhabiting the mainland who, secure in their freedom, may defer indefinitely any measures of precaution which they take against us, but islanders who, like you, happen to be under no control, and who may be already irritated by the necessity of submission to our empire, these are our real enemies, for they are the most reckless and most likely to bring themselves as well as us into a danger which they cannot but foresee.
Melians-
Surely then, if you and your subjects will brave all this risk, you to preserve your empire and they to be quit of it, how base and cowardly would it be in us, who retain our freedom, not to do and suffer anything rather than be your slaves.
http://www.wsu.edu/~dee/GREECE/MELIAN.HTM
For anyone interested in how the story turns out - the Melians decide to fight to preserve their freedom, which leads to 'The Athenians starv(ing) out the Melians, who finally capitulate. In punishment for not surrendering in the first place, the Athenian generals put to death every male citizen of Melos and cart off the women and children into slavery.' Thucydides can be hard to read, since what he unsparingly describes is a generation of death and destruction, leading to the end of Athens as a democracy and as a free state, for no good reason but its own folly.
Hello Freddy,
Are you a Canadian, Freddy? If so ... I can understand what you are saying. As an American I appreciate the submission of America's colony to the North, Canada.
Is this an accurate statement of your opinion of environmentalism, Freddy:
Isn't it a bit ridiculous to draw attention to Canada's trifling national debt of $490 billion and yet insist that everything is ok with the United States of America in spite of its $8,000,000,000,000 debt?
I am pleased that you are opposed to the Kyoto Protocol. Canada' cannot possibly maintain America's cheap gasoline via its tar sands while abiding by Kyoto. Canada's a good colony of the United States of America. I appreciate it, I love to drive, and I don't mind the oceans rising up to swallow Florida. You know, the oceans won't rise up until after I am dead, so why should I care about the pollution generated by the oil & auto industries right now?
But you are right about one thing: You do live in an extraordinarily beautiful place. Those mountains and lakes of Canada are awesome. Too bad that they also are suffering from humankind's pollution and environmental degradation. In a perfect world none of these things would ever happen, but in a perfect world Homo sapiens would never have evolved.
David Mathews
http://www.geocities.com/dmathew1
Last week I posted a comment stating that the correlation between this winters avg temperatures and NG consumption showed an excess of about 6 billion cu ft per day of NG consumption compared to last season, and was showing up in the weekly NG draw.
Temp sources: Add a k initially to the normal airport code except for Deadhorse Ak.
http://www.wunderground.com/history/airport/PASC/2007/1/28/MonthlyHistor...
So I have been doing some data mining. I collected the daily January 06 and 07 temperatures for the following cities: Chicago, Detroit, Pittsburgh, Boston, NYC, and Washington. The High and Low temp was then averaged for each day. The sum of all the avg temp’s were then averaged for each week corresponding to the weekly NG draw from EIA. With the following results.
The week of Jan 6-12 showed no difference in avg temp for 06 to 07 but an increase in NG draw from 46 to 89 Billion Cu ft. 06 to 07 An increase of 43 Billion Cu ft.
The week of Jan 13-19 showed a decrease of avg temp of 5 degrees for 06 to 07 and an increase in NG draw from 81 to 179 Billion Cu ft. 06 to 07 An increase of 98 Billion Cu ft.
The week of Jan 20-26 showed a decrease of avg temp of 12 degrees for 06 to 07. I therefore suspect that the week of Jan 20-26 will show a draw from 88 Billion Cu ft to an excess of 250 Billion Cu ft. 06 to 07 An increase of more than 150 billion Cu ft.
I also suspect that this increased draw will continue even if future 06 to 07 temp differences are zero.
it would be nice if noaa's website was a little easier to use, but they have a goldmine of data. the latest heating degree days table shows that we are about 1 cold week away from a colder than normal winter. not a big deal but this is what the old farmer's almanac said would happen (although their timing was a little off - about 3 weeks late). noaa is forcasting a return to warmer than normal over the next 30 days.
Nice summary.
Last summer, we saw a few rare midsummer NG inventory drawdowns. If 2007 is slated to become warmest year in modern history, as some well known scientists state, we may see more frequent – and larger - midsummer draws.
Warm weather combined with falling Canadian NG imports and increased utility demand (as more and more utilities have switched from heavy heating oil to NG) will increasingly drain inventories until in just a few years or so we may have a real NG winter shortage in the US.
I understand lower temp and increased usage but your first weeks data. with 0 deg. difference but increased useage. Did more people convert to heating with gas? Price differences? More connections- we have had a housing boom. Curious...
Drawdowns are not usage. They represent the difference between usage and injection into storage.
In the winter we consume more NG than we import or produce so the deficit is drawn from storage. Last summer we drew NG from storage at the peak of the cooling season. So it is IMO that we are producing less and consuming more. 43/7days = about 6.
6 billion Cu ft/day is less than 10% of daily consumption. So if production is down 6-7% and consumption is up 3-4% that could be the 10%. Then again the deficit may only be 3 or 4 Billion Cu ft/day.
In any event 6 billion Cu ft/day Requires an additional 2 Trillion Cu ft of storage and we currently have about 3.5 Trillion Cu ft of storage. Then we also need to find the production to provide the additional 2 Trillion cu ft. How much more NG is being consumed producing low sulfur diesel, all the additional NG electric generating capacity for heat and AC and also used to provide increased yield while refining heavier crudes?
Dipchip-
How soon do you see this all leading to an empty US storage tank?
Gail:
We are a long way from exhausting ng inventory. It is looking like a record carry-out after this winter, and, despite the possibility of a draw this summer, we will have plenty for next winter too.
Before inventory is exhausted, prices will rise sufficiently so that further demand destruction in the industrial sector will occur.
Under our present market system, inventory exhaustion is surely years away, if ever. The question will be whether or not you will be able to afford it.
Ah missed that detail, thanks!
Dante over at PO.com thinks the OPEC cuts are bigger than reported. In particular, he thinks the media has screwed up (what a shock), and is misreporting the situation.
He also points to this article.
My opinion remains that the American economy is doing much, much worse than most people seem to be able to grasp - and as one of America's last remaining major industries, petrochemicals, continues to offshore itself, there won't be much left to destruct, except for pure consumption.
Which is the one thing that is considered political suicide in America to even discuss.
There really has been little discussion over the last few months about oil 'demand' and economic conditions - like a number of discussions, it just fades so quietly from view, no one notices.
A hint can be found among those who circle the housing bubble blogs - the sudden drying up of orders among suppliers of things like building supplies is astonishing - and let's face it, a modern American house represents a lot of fossil fuel, from the exterior to its fittings to its interior decoration. Not mention the infrastructure, like roads.
It remains my belief that America is pretty much in a Wile E. Coyote moment right now - off the cliff, but still thinking that success is within grasp.
An interesting discussion is to what extent America's fate determines what happens to everyone else sharing the planet.
I might add, being aware of the fall is generally what makes Wile E. Coyote, certified supergenius, fall - not the fact that he is actually in mid-air. Sometimes, you get the feeling that those cartoons had a much deeper impact on social beliefs than anyone could have ever imagined.
Walking on air is easy, as long as you remain unaware of the fact. Which is why so many people are deeply frightened of even looking around at this point - the canyon floor is a long, long way down.
Very nice, expat. Since this is Sunday, it makes me think about how Jesus walked on water. But since this is Sunday, we'll let everyone make their own connection between Wile E., Jesus, growing up with cartoons and ending up as a reborn Christian.
The worst thing about the US being broke is the suapicion that it's a set-up. Lower your interest rates from 6% to 1%, and double the money supply in 5 years. Then start pushing the idea that it's great to own your own home, even if, or especailly if, you're an unemployed alcoholic who failed his kindergarten diploma. Are we to believe that Washington, the Fed and the banks didn't see that one coming?
I'm afraid the way to finish it off, and create a country of debt-ridden serfs, will lead through Iran.
There was a story in the news the other day, about new home sales dropping in 2006 by the largest percentage since 1990. It was being reported as, "But there are signs of a rebound." Because December sales weren't bad. (Never mind the bizarrely warm weather, which may have encouraged home buyers during a usually very slow period.)
It's housing that has been powering the economy, and now that rising interest rates have shut down the home equity ATM, people are hurting. Not as much as they would have been if energy prices hadn't dropped, though.
And if things really start to bite, they'll probably try lowering interest rates again. We could continue walking on air for quite awhile.
Lowering interest rates risks sending the dollar to tbe bottom of the pit, making imported goods prohibitively expensive. And that's a big chunk of the economy by now.
With 2.2 million homes expected to foreclose in 2007, $1.5 trillion in mortgages to be reset way upwards, and a few million jobs lost in construction, home financing, Home Depot, car sales, and all that trickles down after it, there will be millions of people no longer walking on air. And they will make others look down, and so on. Of course, there's already millions of Americans not walking on air, let's not kid ourselves.
Wandering off topic, but lowering interest rates will pretty much cause the dollar to drop, which is the other shoe waiting to drop. To fix various problems requires change, but changing anything will cause the entire structure to crash - a balancing act doomed to failure, as trying to maintain balance ensures it will be lost in the end. No complexity arguments here, though - this is merely the same as a plane which has stalled, is heading earthwards, and is spinning - at some point, no recovery is possible, because the actions are simply too extreme - pulling out of the dive before hitting the earth rips the wings off, for example - which also means hitting the earth.
Basically, America is reaching the end of the party, and will have little but a truly epic hangover to show for it.
There is were Kunstler has some true insights - reality is approaching, though the dimly seen haze surrounding America's daily driving dream. And that reality looks really, really implacable.
leanan - (I like your links btw - better than the papers)
Are we in a catch 22 with the dollar?
Biggest reason to increase the rate. Who will buy our debt if we don't offer a good rate of return especially if they are concerned about our economy or that the value of the dollar is being "liquidated" by increases in the money supply.
Biggest reason to decrease the rate. To stimulate the economy via debt creation especially if the housing ATM and associated job creation goes down the drain.
I can't see clearly here what direction we will take at this time. History would say inflation.
I think that the real problem facing us now has nothing to do with the economy but servicing debt. The last job creation of a service based economy :)
If you think about it the latest economic bubble has been in debt creation and servicing the housing market is almost a side show to the real bubble.
Now that this is coming to a close some debtors will not be able to service some debt thus the choice is which debtors are going to get screwed by macro-economic manipulation.
If you lower interest rates the big debtors banks and the government are screwed since they need high interest rates to attract debt purchase and they have created far to much liquidity in todays markets so they need to slough off in a sense bad or under performing debt to both protect their debt and allow themselves to borrow more.
So basically I think the Fed and the Central Bank will act in the best interest of the Fed. This means they want two things a weaker dollar that reflects the nature of the US as a debtor nation and a strong interest rate to protect continued debt at the highest levels. Its the spread between the interest rate and the relative strength of the dollar that they will maintain to protect themselves.
Local economic issues such as housing and the US economy are not important if the line up with the feds moves fine if not too bad.
In any case I doubt you will see interest rates lower my call is that you will see gradual increases in interest rates and a falling dollar plus local US inflation caused by increasingly more expensive imports.
It's not a completely nefarious move since it will entice large holders of US dollars to convert to US denominated assets. This means that the world is forced into a buying spree of both safe US debt via decent interest rates and US goods/land/services as they try to reduce their US dollar holdings as the currency weakens. China will of course buy a lot of oil with its dollars but the ME nations will be forced to invest into the US itself to unload the slowly devaluing dollar.
The tie to peak oil is that I believe that economic policy will work to ensure that the fast wealth flowing into the ME will be converted into either debt controlled by the US or US goods or other purchases that the US can control. In short the money will flow back here and although it means we give up nominal ownership of assets to ME companies we control the assets with our military and ownership of the bulk of the world banks.
This means the local US economy will continue to grow in areas that export goods and services needed by our large creditors while the "local" economy will probably tank since its concentrated in exports and local discretionary services which are not needed
by a nation that is focused on servicing debt and protecting the credit of its government.
If I'm right you will see the interest rate move to ensure that the government can continue to borrow and ensure that the dollar does not weaken to fast. This mean slowly rising interest rates in general but probably not any lowering or certainly not enough to stimulate the internal economy. This nice thing about this approach is that for the sectors that are healthy and booming as petro-dollars are eventually sent back home is that they will be forced to borrow money at relatively unfavorable rates so a lot of their profits will be eaten servicing debt needed to grow.
At the end of the day this means the US economy converts to a export centric economy similar to the Asian economies with a focus on producing whatever we are still good at building.
In a sense the World economy has been in a bubble caused by consumer spending using debt derived from asset inflation this is blowing off and with this excess consumer wealth gone we now move to the last stage of globalization with each economy export centric in regions of expertise. Now for the US because of its size exporting ownership of land/homes to the highest buyer will be a part of this. So expect a lot of RE to be bought up by foreign buyers both individual and companies.
A new aspect brought on by globalization that is important and overlooked is that the only requirement is that the money end up in US banks thus the sell of goods manufactured in China by US corporations meets the requirement that the dollars need to come home. The actual place the goods are manufactured is not important just that the dollars flow back into US controlled bank accounts and out of the control of foreign central banks. The key is that eventually a lot of this money needs to always end up being converted into new "big" us debt i.e stocks treasuries etc. In any case the key is control of the debt/money and maintaining a good credit rating for the US.
In any case now that the middle class has reached the point that it can no longer borrow any more money its health is not relevant to future financial moves. The Macro picture is simple the US will pay down its debt via exports or pseudo (Chinese manufacturing at US company controlled plants) and also it will maintain a high enough interest rate to ensure that big debt is enticing.
The end result is of course that the US government ultra wealthy individuals will end up controlling a lot of the "real" wealth in the world either directly or via the ability to physically seize finacial and real assets from foreign owners that displease it.
So expect the foreign fire sale to be a temporary measure on a longer time scale.
And finally the driving force is of course that the wealthiest individuals in the US control enough of the worlds wealth that they can in collusion with the US government actually force the world economy to move in a way beneficial to them and the government.
And this is not some sort of conspiracy theory its simply the way that the big players in the US can leverage the current debt to their best interest. If we did not have this large debt they would act differently maybe by making as much money as they could by producing a large debt :)
Rome lasted for thousands of years basically as a bankrupt empire with a powerful military with the side effect that the empire polarized and lost its middle class I expect the same result in the US.