160 comments on DrumBeat: December 8, 2007
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160 comments on DrumBeat: December 8, 2007
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I normally come to TOD for the oilfield stuff, not the financial apocalypse stuff, but there's a real schadenfreude-inducer over here in Slate about the amplified effects of SubPrime in NYC
http://www.slate.com/id/2179390/
Leanan - if we just mail these to you, will you consider them for the DrumBeat story list? How does that work, exactly?
I think it would be better if you post them here like most people do so others can read them. leanan can't add every story she finds to the drumbeats.
Some people do e-mail me stories, and I consider them, but I don't check my e-mail that often. I'm not that good at e-mail, I confess. I usually don't post financial stories up top, anyway.
I would say you should just post new stories as comments. I think they get just as much attention in the comments as they do up top.
If you really want it posted up top, submit it as news at PeakOil.com. I check the queue there a lot more often than I check my e-mail.
Leanan, thanks for the tip. I had not been checking the news at PeakOil.com. Just checked it and found this animated cartoon. It is a keeper.
http://peakoil.com/article33887.html
Ron Patterson
Ron, excellent. Definitely one to pass on to every one you know. Thanks.
Richard Wakefield
Heh. We TOD staffers have been admiring that. I think there will probably be a dedicated post about it.
I wonder if "OilyBoyd" is the guy who posts as OilCanBoyd here?
Note that our link is posted at the end...
That really is a wonderful piece of animation. In two minutes it communicates the whole peak oil concept without saying a word. Brilliant.
Anyone got a few million bucks sitting around so this could be shown during the Super Bowl? :-)
I've been getting my students to SEE IT, because I try to link peak oil and evolution.
Notice the "evolution" of the car on the uphill ride...
Is this supposed to be a literal representation? No. Its a simple and quite brilliant animation conveying an idea.
Some of the greatest teaching in history has been made by the use of illustrations. Has it worked? I think your comment misses the point but it proves this animations ability to make you think! (not you, but you in a wider sense just to clarify that)
Deceptive Cartoon:
I find the near vertical descent of this cartoon very misleading. ASPO's latest charts and graphs show an all liquids peak of 87 Mbpd in 2010. Forty years later, all liquids is down to 41 Mbd. On average this is 1.15 Mbpd or 1.3% per year. Do you think we can handle a 1.3% decline rate?
And the ASPO knows exactly what will happen? All their prognostications are just a best case scenario. Jeffery Brown's Export Land Model indicates we will have a much steeper decline.
I think it is really foolish to expect a gradual slow decline. That is just another form of denial. Producing nations will see an increase in consumption while production declines. Hording will be rampant. And there is the ever possibility of resource wars.
In fact what is happening right now in Nigeria is nothing more than a resource war. Those Nigerians not getting their fair share of the wealth are fighting like hell to get it. And that one particular resource war just took 900,000 bp/d off line.
Nigeria: Country's Production Capacity Drops By 900,000bpd
And as the price of oil climbs higher and higher and people get hungry because of the consequences of peak oil, the violence will get greater and greater.
A slow decline of 1.3% per year, for decades? You are dreaming. I would predict a best case scenario of a drop of about 5% per year. Less than 1% for the next few years, then 2 to 3% for just a few years, then sometime between 2015 and 2020 a drop of at least 5% per year, barring severe resource wars. In that case the drop will be much steeper.
Ron Patterson
Drudge Report headline today (so far there is no story linked):
OIL-RICH NATIONS USE MORE ENERGY, CUTTING EXPORTS...
Here's the link to that article: http://www.iht.com/articles/2007/12/08/business/09oil.php?WT.mc_id=rssbu...
"Ten years from now, world capacity to produce oil could be 20 percent higher than today," said Daniel Yergin, chairman of Cambridge Energy Research Associates. "But a lot will depend on how the geopolitics work out."
Well done idiot... No mention of Peak Oil just Geopolitics WOO!!
Yergin et al are not idiots without a cause, the geopolitics he cites is code for Exxon's "just get us access", namely more resource wars. They are not passive in their denial.
Well done. Well done. Well done. What else is there to say to Jeffrey Brown, and his leading edge work on the Declining Exports story? Looks like this theme may now make it to the national edition of the NYT for Sunday, 08 December 2007. Possibly the front page. Ho Ho Ho. Merry Christmas.
http://www.nytimes.com/2007/12/09/business/worldbusiness/09oil.html?hp
Gregor
I had several discussions with the NYT reporter on the topic of net oil exports. I suppose they felt that they had to include our buddy Yergin for balance.
From the NYT website:
Other media outlets are picking up the story:
http://www.france24.com/france24Public/en/administration/afp-news.html?i...
from the IHT article...
"It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years," said Amy Myers Jaffe, an oil analyst at Rice University.
Rice University is just a stone's throw away from WT in Dallas (OK, Rice is located in Houston but Texans can throw stones a long way!) :-) I'll bet Ms Jaffe is familiar with WT's work.
Try this
Posted originally by J Orlin Grabbe.
best
I was going to ask the same question, but figured if I lurked around a bit, someone else would ask.
I am hard pressed to think after all the work you do researching and moderating the DrumBeats, you would have time to mess with email. A good portion of my day is taken just *reading* the DrumBeat!
I am very thankful for access to this forum and all the work you and the others contribute. Once in a blue moon, I stumble on a gem, but the motherlode of gems is here.
Steve
I've been reading the TOD:Canada debt meltdown stuff for a while now, so it's becoming rare for me to encounter an article that makes me even MORE pessimistic about how this stuff is going to unwind, but this little nugget did the trick:
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mort...
Check out the comments; one mortgage broker after another saying "Yep, he nailed it. I've been trying to tell people this for months". Worrisome indeed.
Ray: IMO, the subprime debacle is a preview of how PO will be addressed in North America. The inherent problems with these totally unregulated (rife with fraud) markets have been known for years, yet financial institutions eagerly threw their shareholders money over the cliff with abandon. Why? Simply because it WASN'T THEIR MONEY. From Mozilla with his $100 million cashout to Chuck Prince, all these guys really focus on is their own personal pocketbook when the SHTF. They continually plead ignorance when it comes to burning these companies, but they are as cunning as anyone when it comes to their own money. Which brings us to PO-for years now anyone that is interested knows the score. What are the elite doing? Some (like Buffett and Gates) are quietly positioning themselves to profit, others are attempting to personally profit by spreading disinformation. When TSHF it will be the same as this subprime trip- "Who knew? This was all unforseen". CERA will be all over the media much like Greenspun is today and from their lifeboats they will rule the passengers still on the Titanic.
Ray, nice catch. Hanson is especially familiar with Cali real estate but I noticed that he used the term 'costal states' several times in his column. I have used his last paragraph summation of possibilities below, from your link.
...snip...'One final thought. How can any of this get repaired unless home values stabilize? And how will that happen? In Northern California, a household income of $90,000 per year could legitimately pay the minimum monthly payment on an Option ARM on a million home for the past several years. Most Option ARMs allowed zero to 5% down. Therefore, given the average income of the Bay Area, most families could buy that million dollar home. A home seller had a vast pool of available buyers.
Now, with all the exotic programs gone, a household income of $175,000 is needed to buy that same home, which is about 10% of the Bay Area households. And, inventories are up 500%. So, in a nutshell we have 90% fewer qualified buyers for five-times the number of homes. To get housing moving again in Northern California, either all the exotic programs must come back, everyone must get a 100% raise or home prices have to fall 50%. None, except the last sound remotely possible.
What I am telling you is not speculation. I sold BILLIONs of these very loans over the past five years. I saw the borrowers we considered ‘prime’. I always wondered ‘what WILL happen when these things adjust is values don’t go up 10% per year’.'
"How can any of this get repaired unless home values stabilize? And how will that happen?..."
Does anyone else see an opportunity here to direct public policy responses to this crisis to advance an agenda of more TOD?
I'm not exactly sure what that agenda should be...my first reaction was...bulldozers, lots and lots of bulldozers. To have gov't buy and bulldoze foreclosed properties so as to destroy some supply and put a floor under house prices. But a bulldozer is such a blunt instrument, there should be more effective ways...
After all it is naive to deny government currently has a huge role in almost all aspects of residential real estate markets. From FHA, Freddie Mac, Fannie Mae, HUD, tax policies and subsidies, local zoning, you name it...
Government at all levels are going to be called upon to address this crisis at some point, guaranteed.
Should we not insist that any of our tax dollars spent to give any sort of relief to distressed communities be directed towards properties where services and infrastructure are already available, and relatively less relief for property which might have to be abandoned anyway in an era of FF shortages?
Just a thought, as later on in this crisis when policy gets developed in an ad-hoc, panic driven mode, it will be too late.
I saw that when it came out. I didn't post the link because I was under the impression that Stoneleigh had included it.
While TV isn't like being there in person, anyone that has an ability to read body language clearly realizes that Bush, Paulson, Bernanke, el al are really spooked about something.
They know what's coming and they know they can't stop it, they are just trying to buy time to allow the connected and the leeches to cash out at the expense of the silent majority.
If you were pretty sure the crap was going to hit the fan on your watch,you might look a little spooked too..
Rayrick, Musashi,
we did include it in the Finance Round Up.
OK then, an amusing convergence here at ft.com
Unfortunately the author was unable to wedge in a global warming angle, but apart from that it's a perfect DrumBeat story. Full Pollyanna-ish scoop at http://www.ft.com/cms/s/0/60e1076a-a1b8-11dc-a13b-0000779fd2ac.html but may be register-walled...
This is a great article, thanks. And reminds me of another article from the NYTimes a week or so ago:
http://www.nytimes.com/2007/11/28/business/worldbusiness/28petrodollars....
--Jennifer
Plucky,
I posted the article in yesterday's Finance Round Up. You can mail finance articles to Stoneleigh.
Losses in tax revenues for all levels of government will be a glowing hot iron in the near future. Maintenance of infrastructure (road, water, etc) will suffer, as will education, health care, and many more fields. Raising taxes is hardly a solution, since people's decreased income and asset values, which cause the losses, won't allow for it.
Substantial losses from public money funds invested in CDO's, ABCP and MBS on top of the tax revenue decreases, are a near certainty for many local government levels.
ilargi, not just local governements. I happen to know an auditor for one of the US states; without any prompting from me she called some of that state's investments "garbage".
Ordinarily, in a recession state and local employment tend to be more stable than private sector and so tend to moderate the impact of the recession. This time around I think we'll see substantial layoffs from state and local government as well.
Thanks to you and Stoneleigh for the great job you do with the Financial Round Up.
PLAN, PLANt, PLANet
Errol in Miami
Wait until next year.
This year the pump monkeys might be able to keep the ball in the air long enough for the wall Street mafia to collect their bonuses.