DrumBeat: September 22, 2008
Posted by Leanan on September 22, 2008 - 4:10pm
Topic: Miscellaneous
Oil spikes $25 a barrel on anxiety over US bailout
NEW YORK - Oil prices spiked more than $25 a barrel Monday — the biggest one-day price jump ever — as anxiety over the government's $700 billion bailout plan battered the dollar and touched off frenzied buying of safe-haven investments including crude.Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back somewhat to trade at $122.60,up $18.05. The contract was set to expire at the end of the day, adding to the volatility; the October price began accelerating sharply in the last hour of regular trading.
The November contract, scheduled to become the front-month contract at the end of Monday's session, was trading at $108.80, up $6.05.
Crude has gained about $40 in a dramatic four-day rally that has at least temporarily halted oil's steep two-month slide below $100. At this rate, crude is within striking distance of its all-time record of $147.27, reached in July.
"We're off to the races again in crude," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill. "There's a renewed scramble for commodities because of a general weakness in the dollar."
Climate change linked to increased military threats
Defence Force chiefs were told last night they could be called on to defend ''Fortress Australia'' from starving outsiders under the worst-case scenarios for global warming.
BP says BTC oil pipeline shipments cut after gas leak
LONDON (Reuters) - The BP Plc-led (BP.L: Quote, Profile, Research, Stock Buzz) Baku-Tbilisi-Ceyhan (BTC) oil pipeline is pumping less oil following a Sept. 17 gas leak that cut output from fields in the Caspian Sea, BP said on Monday.The reduction in supplies through the pipeline, which can pump an amount equal to 1 percent of world supply, comes only weeks after the flow resumed after a fire on the line in eastern Turkey halted shipments.
It will come as a shock to most Americans and the media, but as the election reaches a crescendo on the issue of preparedness and energy, neither presidential candidate - nor anyone in local, state or federal government - has developed a contingency plan in the event of a protracted oil cut-off. It is not even being discussed. Government has prepared for hurricanes, anthrax, terrorism and every other disaster, but not the one threatened daily - a protracted oil stoppage, whether caused by terrorism, intervention in the Persian Gulf or a natural disaster.It is like seeing a hurricane developing without a disaster plan or evacuation route. Our allies have oil shortage interruption contingency plans, but America does not.
THE CRUDE realities: America uses approximately 20 million barrels of oil per day, almost 70 percent of which is imported. If we lose just 1 million barrels per day, or suffer the type of damage sustained from Hurricane Katrina, the government will open the Strategic Petroleum Reserve, which offers a mere six-to-eight week supply of unrefined crude oil. If we lose 1.5 million barrels per day, or approximately 7.5%, we will ask our allies in the 28-member International Energy Agency to open their SPRs and otherwise assist. If we lose 2 million barrels per day, or 10%, government crisis monitors say the chaos will be so catastrophic they cannot even model it.
Melting Ice Brings Competition for Resources
Bo Madsen, a climate researcher, is plagued by a simple question: How heavy is the world's largest island? More importantly, Madsen wants to know how quickly its weight is changing."This is no academic question," the Dane, a scientist at the National Space Institute and the Technical University of Denmark, yells over the whipping of the rotor blades. "The answer will determine the fate of millions of people."
Enbridge lifts force majeure on one Gulf gas line
NEW YORK (Reuters) - Enbridge Inc's Enbridge U.S. unit said repairs on its Mississippi Canyon natural gas pipeline in the Gulf of Mexico following Hurricane Ike were completed over the weekend and it was lifting force majeure declared on the line on Aug. 30.The company also said in a website posting it would begin accepting nominations for gas flow on Sunday.
Kazakhstan seeks to export oil via Russia
AKTYUBINSK (RIA Novosti) - Kazakhstan will increase oil production by 12 million metric tons in 2009 and is interested in pumping it via Russia, the Kazakh president said Monday."It is very important that Kazakh oil should pass through Russia. We expect oil production to increase next year. It will grow by 12 million tons during the year," Nursultan Nazarbayev said at the end of a Russian-Kazakh border region forum.
Iraq signs natural gas deal with Shell
BAGHDAD (Reuters) - Iraq signed a multi-billion dollar natural gas deal with Royal Dutch Shell on Monday, the second major energy deal agreed with a foreign firm since the U.S.-led invasion in 2003.
Russia's ties with Venezuela worrying
According to media reports, four warships with as many as 1,000 sailors from Russia's Pacific Fleet could take part in the November training exercise off Venezuela's coast.In a sign that it is paying attention to Russia’s military moves with Venezuela, the United States has sent navy ships and bombers along the Latin American coastline to keep an eye on developments there. Washington has indicated it will do everything necessary to protect its national interest in this area.
Silva says poor to benefit from Brazil oil profits
Brazil's president says his nation will use profits from recently discovered oil reserves to help ease a deep divide between rich and poor.
Pakistan stares into the abyss
The future of the country looks bleak. The economy is in a poor state, its failings made manifest in food riots, high unemployment and falling currency reserves. The new President looks weak, and the army disorientated. The intelligence services have been penetrated by Islamic militants. Sectarian violence is worsening, opening up the prospect of a country virtually at war with itself. The border with an even more chaotic neighbour, Afghanistan, remains porous.
Pakistan troops 'repel US raid'
Pakistani troops have fired warning shots at two US helicopters forcing them back into Afghanistan, local Pakistani intelligence officials say.
North Korea pursues restarting nuclear plant
VIENNA: North Korea has asked the International Atomic Energy Agency to remove seals and cameras from its main nuclear complex, the agency's chief said Monday.
Here comes $500 oil: If Matt Simmons is right, the recent drop in crude prices is an illusion - and oil could be headed for the stratosphere. He's just hoping we can prevent civilization from imploding.
Simmons was transformed overnight from an influential industry expert to an A-list pundit by the publication in 2005 of his book "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," a fairly technical read which argues that Saudi Arabia's oil supplies are much more limited than everyone thinks.Since then he has moved to the forefront of the peak-oil movement - a once fringe but now growing contingent of oil industry veterans, independent consultants, investors, and academics who believe that world oil production is at or near an inflection point, after which it will fall inexorably and fail to meet projected future demands. According to Simmons, we have already passed that peak. And while we're not going to run out of it anytime soon, the era of easy oil is over, and the world is about to enter a period of convulsive change. (Hint: Learn to garden, and buy some comfortable walking shoes.)
Here's a little speech we worked up for the next President to deliver at 8 p.m. eastern standard time on his first day in office. Say something good and we'll tuck it into the final draft which publishes before the election. We're told this speech could go viral, and with a few tweaks, be delivered by the next President. So, if you want to touch history, if you want a piece of the first democratically crafted presidential speech ever, jump in. (Like the democratically crafted movie "Snakes," only without the flop part). This speech could well be the marker for the dawn of the New Energy Order.
IEA: 'Oil Markets Testing Water Around $100/Barrel'
Oil markets are trying to find a level somewhere around $100 a barrel but prices may fall further later in the year if the U.S. financial crisis hurts the global economy, the deputy head of the International Energy Agency (IEA) said on Monday.Oil was unlikely to fall to $60 but it wouldn't get back up to $150 this year, either, IEA Deputy Executive Director William Ramsay told Reuters in an interview.
Oil nears $107 as investors weigh US bank bailout
LONDON - Oil prices rose Monday as investors grappled with the possible impact on crude demand of a $700 billion U.S. proposal to buy bad mortgage debt.Light, sweet crude for October delivery on the New York Mercantile Exchange rose $2.33 to $106.88 a barrel by midafternoon in Europe after falling as low as $103.35 earlier in the day. On Friday, the contract rose $6.67 to settle at $104.55 on initial hopes the rescue plan would stabilize the U.S. financial system and help boost economic growth.
Bangaldesh: Pirates rule coasts as shoals of hilsha in water
Hilsa fishes are being netted in plenty in Patuakhali and Barguna coasts for last four days but fishermen are afraid of going to the sea due to rampant piracy.At least 35 fishing trawlers were looted and 30 fishermen abducted by pirates in last five says. The victim fishermen brought freedom after payment of ransom and returned to Kakata and Pathorghata coasts.
...On September 19, about Tk one crore was looted in fishes, nets, fuel and cash from 12 trawlers. Ten fishermen were abducted and 13 injured in the attack on trawlers that included FB Sapan, FB Rakib and FB Mayer Doa.
Weekend plans take a back seat
Tourist destinations were feeling the hit Friday night after a panicked community drained most of the gas pumps. Crowds were smaller and business was noticeably slower, said Kassie Miller, a bartender at Legends on Broadway."It's absolutely affecting us," she said. "This is our season of tourists. You're going to have people who are going to come anyway, but it's going to hurt a lot of people."
Some visitors had filled up before they got to Music City and weren't concerned about getting around. Those who had flown into Nashville said car rental companies had tipped them off to the gas shortage and warned them to prepay for gas on the front end so they wouldn't be left without fuel.
Others arrived with a quarter of a tank, never expecting the long lines and blank fuel price signs that awaited them.
Fuel shortage turned Boyle into a hoarder
Interesting factoid No. 1: Those shutdowns caused by Hurricanes Gustav and Ike resulted in lost production of nearly 53 million barrels of petroleum, including 25 million barrels of gasoline, according to the U.S. Energy Information Administration. Those 53 million barrels represent 22 percent of total U.S. production.Interesting factoid No. 2: The Colonial Pipeline, which brings most of our gas from the Gulf, moves at just 4 mph, according to Gary Harris, executive director of the N.C. Petroleum and Convenience Marketers. The upshot: It takes a week to 10 days to get the gas back up here after the refineries open.
South Copes With Severe Gas Shortages
Drivers throughout the South have faced gasoline shortages, closed stations, high prices and long lines at the pump for the last several days. Hurricanes Gustav and Ike slowed production at oil refineries on the Gulf Coast and knocked out power along many pipelines to the South.The shortages were widespread over the weekend, as gasoline supplies dwindled at many stations. Drivers in Atlanta, Nashville and Tallahassee reported lengthy, gas-fueled quests to refuel.
“This is station No. 4,” said Tracee Treadwell as she refueled at the Briarcliff QuickTrip. “I’ve been driving for 20 minutes looking for gas, and I live two miles from here.”
The problem is self-perpetuating, said Jason Toews, founder of GasBuddy.com, a consumer advocacy Web site. When people hear about shortages, Mr. Toews said, they rush to the pump, which causes more shortages.
One station in Marietta, Ga., reported lines on Friday of two miles long.
Governments should keep populace informed on gasoline
Gasoline has slowly started to make its way back to Middle Tennessee pumps. The question now is: What have we as a community learned from this mess?Let’s start with a lesson for governments both state and local. Government does not need to treat gasoline availability like a market issue. Government needs to stay on top of the gasoline availability issue and communicate at length with the public when a shortfall is anticipated.
How 'Ike' soaked Canadian drivers
It goes like this: Gasoline can be sold in two ways, on the futures market or the spot market. The futures price paid today will typically be reflected at the pump in October, when the fuel is delivered. The spot price is for fuel flowing through the pipelines today, and the impact at the pump is immediate.It's the spot price that jumped on Sept. 12, a whopping 13 cents a litre over the futures price, buyers reacting to a storm that wouldn't even hit Texas until the next day. "Basically, they guessed," says McKnight, on the phone from Oshawa. Buyers who, in effect, bid on the gas at auction were gambling that Hurricane Ike would knock out the three big pipelines carrying fuel out of Houston. It did no such thing, but you and I still got stuck paying for a phantom gas shortage triggered by a disaster that never happened. "This was opportunistic, to say the least," says McKnight.
India: Train robbers die from poison gas
AT least 15 Indian train robbers looking to steal diesel from a freight carriage died today after inhaling poison gas stored in another tank they accidentally broke open, police said....The train was earlier stopped by dozens of armed people who police believe were members of a gang which frequently steals crude oil from trains and pipelines carrying oil to refineries in the oil-rich state.
Zambia Refinery Closes, Vital Fuel Imports Arrive - Minister
Zambia's daily diesel consumption is expected to hit 2 million liters by the end of the year compared with around 1.2 liters last year due to a surge in mining activities and power shortage in the country.Copper mining companies rely on diesel to run copper treatment facilities and mines have also acquired more thermal generators this year to mitigate the effects of power outages.
FACTBOX - Key issues in South Africa
South Africa, which relies on coal for the lion's share of its power generation, is in the grip of an electricity supply crunch, the result of years of underspending by the government on generation capacity.The power shortage in Africa's biggest economy led to nationwide power cuts in January. This affected large aluminium smelters and forced gold and platinum mines to shut down operations for five days, pushing the precious metal prices to records and undermining South Africa's economic outlook.
America, meet our 'long emergency'
In a week when the American economic system reeled and the largest government bailout in the history of planet Earth had begun, and the PG led with a story on the Steelers, I decided to reach out to the man who saw all but the football bit coming, James Howard Kunstler.Mr. Kunstler's 2005 book, "The Long Emergency: Surviving the Converging Catastrophes of the 21st Century," predicted that oil would soar above $100 a barrel, that the real estate bubble would burst, that our financial system would implode, and that there would be scattered food shortages across the world.
If that ain't a quick summary of 2008, you haven't been paying attention.
DUBAI – Top oil exporter Saudi Arabia has trimmed oil supplies to international majors and U.S. refiners since the start of September, industry sources said on Monday.The kingdom had already throttled back on supplies even before it signed up to an OPEC deal earlier this month to reduce supplies that exceeded the producer group's targets, industry sources said.
"They were marketing their crude very aggressively from June through August, but they slowed it down for September and October," said one industry source at a major oil company on condition of anonymity.
Gas Hard To Find In Metro Atlanta
Officials said they wanted to stress to the communities that no one should be hording gasoline. Cars should only be refilled when they are close to empty and drivers should not top off tanks when they are half full or more. They stressed that more gasoline is on the way.The Colonial Pipeline, the nation's largest, is the major source of gasoline in Georgia. The Alpharetta-based company said they usually carry an average of 100 million gallons of gasoline and other refined petroleum everyday, but they are not at that capacity yet due to a lack of supply from the refineries.
Canada's role missed in U.S. energy debate: Yergin
BANFF, Alberta (Reuters) - The way Daniel Yergin sees it, the high-stakes debate over energy security in the U.S. presidential campaign has ignored one of the most critical parts of the United States' oil supply equation: Canada.The United States' neighbor to the north has quietly become its largest foreign oil and gas supplier, and that has actually improved energy security in the United States, said Yergin, energy and geopolitical analyst, Pulitzer Prize-winning author and chairman of Cambridge Energy Research Associates.
Meanwhile, Canada's oil industry is struggling at home to keep boosting production of the country's vast oil sands while facing major new environmental and cost hurdles, Yergin said.
Mexico May Say Oil Output Fell, Pressuring Congress
(Bloomberg) -- Petroleos Mexicanos, Mexico's state- owned oil company, may report that crude output fell for the 25th consecutive month in August, adding pressure on Congress to take up delayed legislation aimed at increasing production.
Buoyed by vast oil wealth, Russia seen shrugging off market collapse
MOSCOW: Buoyed by vast oil wealth, Russia is shrugging off its worst market meltdown in a decade, emerging with its booming economy almost intact, analysts say.The Russian stock market last week saw its sharpest falls since the catastrophic economic collapse of 1998 after suffering the toxic combination of global financial turmoil, falling commodity prices and a local credit crunch.
But with oil prices still almost 10 times higher than a decade ago, economists see Russia emerging with a relatively mild hangover.
Russian Navy ships head to Venezuela
MOSCOW (AP) — A Russian navy squadron set off for Venezuela Monday, an official said, in a deployment of Russian military power to the Western Hemisphere unprecedented since the Cold War.The Kremlin recently has moved to intensify contacts with Venezuela, Cuba and other Latin American nations amid increasingly strained relations with Washington after last month's war between Russia and Georgia. During the Cold War, Latin America became an ideological battleground between the Soviet Union and the United States.
Russian, Venezuelan oil, gas companies may create consortium - Sechin
MOSCOW (Itar-Tass) -- Russian and Venezuelan oil and gas companies may create a consortium to produce hydrocarbons in Latin America, First Deputy Prime Minister Igor Sechin said on Monday, as he briefed the Cabinet’s presidium on the results of his last week’s working trip, which took him to Cuba, Venezuela and Nicaragua.
Experts' picks for best reads on economy
Twilight in the Desert, by Matthew Simmons (2005): An investment banker argues that the United States is over-dependent on Saudi Arabian oil, which he says is running out faster than official estimates would have us believe.Says O'Higgins: ``The book explains why the supply of oil will have trouble growing in the face of the rapid maturation of the major oil fields of the world.
Blood and Oil is a harrowing, methodical account of the United State’s political and military ties to oil. Activists for the environment, advocating energy independence, frequently claim that the only roadblock to mass action is ignorance — people simply don’t understand the state of the emergency or the consequences of our inaction. Michael T. Klare’s film places the blame elsewhere.It presents without bias, the violence-filled history of the United States foreign policy efforts to protect and secure fossil fuels in the Middle East. It’s not a film targeted at the individual, and chooses not to suggest personal action to prevent climate change—switching out our light bulbs, checking tire pressure and switching to sustainable forms of energy. Instead, Blood and Oil is a targeted missile to the voter: It shows the consequences of a oil-addicted foreign policy. By the end of the film, when the current administration is shown tersely denying that the war in Iraq was motivated by oil, Klare will likely have convinced many that they are lying through their teeth.
Ohio: More residents protest lack of power
Protesters in at least two cities came out on Sunday, Sept. 21, carrying signs and demanding answers – and power – from Dayton Power and Light.
Nigeria: Mobile operators to power base stations with renewable energy
Determined to take communications to the unreached, pressured to find a working solution to the energy crisis hitting most developing countries, the GSMA, global body for mobile operators last week, launched the Green Power for Mobile programme with the goal of helping the mobile industry use renewable energy sources, such as solar, wind, or sustainable biofuels, to power 118,000 new and existing off-grid base stations in developing countries by 2012. Achieving that target would save up to 2.5 billion litres of diesel per annum and cut annual carbon emissions by up to 6.3 million tones.
Republican presidential nominee Sen. John McCain said at his party's convention that he wants to repeal the Renewable Fuels Standard that sets mandates for ethanol production. He also has stated that he wants to eliminate subsidies for domestic ethanol production and tariffs on ethanol imported from foreign nations such as Brazil so the free market can fix the energy crisis. The Democrats have nominated Sen. Barack Obama, who favors the Renewable Fuels Standard along with current subsidies and tariffs on ethanol as a means to shift the United States toward renewable fuels.The debate figures to drag more than a few conservative farmers into an unfamiliar side of the political spectrum.
Powering the Mekong with rice husks
Flour mill owner Le Minh Truong was struggling with the dramatic increase in coal prices.The Can Tho City entrepreneur was beginning to wonder if his business would survive when word reached him about scientists in his own neighbourhood producing a new kind of fuel – cui trau (rice husk firewood).
Ethanol ruling 'to force up food'
ANALYSTS have warned that further food price rises are inevitable after the Queensland Government revealed almost half the ethanol to be blended in petrol used in motor vehicles in the state would come from grain.Queensland will become the national leader in biofuel use after the Bligh Government yesterday pledged to press ahead with plans to require petrol to contain 5 per cent ethanol by 2010.
Economic crisis threatens EU measures on climate change
BRUXELLES (AFP) - The recent economic downturn could push the European Union to adopt more modest ambitions in its fight against climate change.Although the European Commission has said it wants to cut greenhouse gases by 20 percent by 2020, business leaders oppose the use of fines to oblige industry to reduce its emissions -- especially in the current economic crisis.
U.S. companies see climate risk, but lack plan
(Reuters) - U.S. companies judge climate change a risk to their business, but lag global companies in setting targets to cut emissions, according to a global survey.
Climate change presses traditional almanacs
Hagerstown, Md. -- They call themselves prognosticators, people who study the phases of the moon and the height of wasp nests, then declare there will be showers on Oct. 18, 2009.Prognosticators create long-range weather charts for the handful of surviving farmer's almanacs - an old job, done an old way. They eschew Doppler radar and weather satellites and look for clues in the timeless rhythms of nature.
But now, the world and the weather don't look as timeless as they used to. Scientists say the planet is warming, threatening to make droughts more widespread, heat waves more punishing and hurricanes more severe.
So one of the country's most fervently unmodern subcultures has had to confront climate change. Prognosticators are deciding how - or whether - they should factor greenhouse gases into weather-predicting formulas that are two centuries old.



This exchange from this morning’s NY Times just about says it all. It gives a sense of just how devoid of reason, how internally contradictory the administration’s argument in favor of the $700 billion bailout is:
So let me get this straight. The only way the bankers will participate is if the US taxpayers give them a blank check with absolutely no strings attached. Otherwise, as Paulson says, they “aren’t going to participate.”
But, almost in the same breath, if the taxpayers don’t give the bankers everything they want, exactly on their terms, then there will be "economic calamity," "meltdown," and "cataclysm".
Actually, this type of “reasoning” has a name. It’s called “Divine Right:”
It was with good reason that FDR dubbed the nation’s economic elite “royalists.”
It should be freakin' punitive.
Better yet, it should be nonexistent.
Regarding bailout I am annoyed as everyone of you, however:
This is a in effect consumer society. In the end it is not the banks who get bailed out, it is actually the consumer, who will be again able to (at least this is the plan) to take loans and spend money on stupid things.
Majority of people here (myself included) are probably not the big spenders. As such, we don't add a lot to this sick consumer society ;) Since we don't know how to spend, the money goes to those who can (yes, it is not fair). We should not think about the bailout in terms: is it fair or not. Of course it isn't. It is like Peak Oil. Deny it until you can, and when you have to admit it, deny it further.
btw: Wanted to ask you another thing. I see you post a lot from Denninger. That guy, however smart he is, does not want to acknowledge Peak Oil and thinks drilling will save the problem. I think he has got some issues... In the end it is not Paulson's and Bernanke's fault, the problem is that capitalism can't grow without limits, especially not when energy is becoming a problem.
That may be the plan...but it's not going to work. That's my main beef with this.
Probably not. It is like life though. We all know we have to die at one point, but not counting suicidal persons tommorow is infinitely better than today ;)
It's not going to work well in part because countless tens of millions of consumers (as opposed to citizens who might have had responsibilities and duties, some of which might have had something to do with prudence and earning one's own way), such as these parasites (most of whose "jobs" were to press the start button on trains that should have been fully automated decades ago), and the parasites in Detroit (where the "jobs" are, or were, to do assembly "work" that ought to have been fully automated decades ago), and on and on and on, have already gotten and spent their bailouts, in many cases several times over. The visible part of said bailouts includes countless trillions sunk into vast tracts of enormous houses "owned" by thick-witted, semi-educated drones who never could have earned them in a billion years, but were able to pay the mortgage out of a presumed perpetual and rapid increase in value - that pesky exponential yet again. The invisible part includes the countless trillions sunk into far-reaching infrastructure supporting all those unearned houses.
The Ponzi scheme was immensely popular for the decades it lasted, since as long as dimwitted consumers could use their houses as founts of free money, they certainly didn't care a fig what the big boyz did, or how rich they got doing it. Now, the party that was never to end may be doing just that, with the bills coming due. I expect the political enablers to put off the real reckoning until at least November 5, but beyond that ... ?
I disagree, and find this a bit superficial
The short-term winners in the Ponzi scheme were the "drones" in the banks that pushed this poison, the media hacks who made their careers touting it, the real estate agents in every little town in America who seemed to grow rich beyond their wildest dreams (even though they may have failed at every other endeavor they tried in the past)... and so on.
Yeast makes flour and water bubble up real good -- but it will collapse unless you bake it.
Now we are about to bake the bubble.
Spengler over at ATimes has a great piece on why Congress is going along with this -- it is because USA is not a nation of sheep, but rather a nation of addicted gamblers: E pluribus hokum or
When the gamblers bail out the casino
Thanks for that link.
Cheers
Check out online reports of McCain being seen at the craps tables too many times.
I especially like the end of the Article:
Ron Paul lost in the Republican primary election.
The End of the United States of America
What is outrageous, is they are proposing to give the financial institutions the power to run their own bailout and TAX(because that's what it is) the taxpayer to cover the bill, while taking away the right of Congress or the Supreme Court to challenge their actions.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
We are talking the wholesale gutting of the Constitution, the end of the seperation of powers, the end of self-government for the American people.
We are facing taxation without representation(one of the causes of the American Revolution), and the subjegation, the enslavement of the American people for generations to come, to pay a debt they did not incure, while handing the ultimate power to a ruling class.
This is not a bailout, this is a coup. It is the overthrow of the United States Government and the enslavement of it's people.
The easiest way to defeat this coup is to just say no to the bailout and let them fall under the weight of their own debt.
Will that happen? No, because they have already purchased the representatives of the American people, who will sell us all for 30 pieces of silver.
Sweet Jeebus, the whole country is about to get a Section 8. Lovely.
If one takes your post seriously then the possibility arises that the whole subprime fiasco was a planned strategy, designed to precipitate exactly these events.
Close. The initial plan of heavilly shorting the ABX index used to calculate mark-to-market valuations for MBS and MBS-backed CDOs was done to enable the easy takover of numerous mortgage companies, whose own stock was mercilessly shorted though naked shorting and through the use of the Options Market Maker's own "legal" ability to naked short. What wasn't planned was the quickly cascading effect on the whole financial system, which was already stressed do to high energy and commodity prices, and war. That's the synopsis. Oh, and I should certainly mention the do nothing SEC, which could have stopped the whole process if it had enforced its already existing regulations; so, there was certainly indirect collusion. And I would be very remiss to not mention the financial press's role in this, too. Especially thestreet.com, marketwatch, and CNNmoney, with help from Forbes, the Wall Street Journal, and many others. I know all this very well because I was an investor involved up to my eyes in REITs from 2001-2007 as it all unfolded. As events unfolded and we debated and discussed at the Yahoo Finance message board for NFI, I was among the first to call these financial pirates Financial Terrorists, and they are deserving of a pirate's or terrorist's fate. They already got their money out of me; they ain't gettin' another penny.
"The only difference between the Republican and Democratic parties is the velocities with which their knees hit the floor when corporations knock on their door. That's the only difference." - Ralph Nader
Case in point: The last 7 days...
aaargh... This guy sometimes make so much sense its almost a crime. Will he concentrate his limited resources in states where a few votes could tip things to the Far Right yet again? If so, he's decided not to beat 'em but to join 'em in self-fulfilling prophecy land. The Right loves to wreck government using corporations and their cold money logic. Ralph loves to grandstand while watching them do it.
I'm in the UK. I don't know much about Nader. But, and I may get down-voted for this one, I've always wondered about Nader's true loyalties.
What he misses is that velocity matters.
Hey, he stole my line.
Dollars gone down considerably, Oils up 10 bucks and gold is soaring since last week at 910!
As of 1730 GMT, the Dow is down 230, 2%, and Nasdaq is down 58, 2.5%.
Market's down, dollar's down, oil's up, and gold's up.
Just another day at the bone yard.
Looks like oil is up limit at $123 & change. Time for a new poll?
another day, another poll :)
today, we just skipped the 102 and 112 polls alltogether
Any suggestions for a new poll? I'm thinking we need a wider range here...
A. The world economy will implode within the next 30 days.
B. The world economy will implode within the next 60 days.
C. Who cares? I'm already underwater...
D. Who cares? It's almost Winter and the SURF is going to get good...
E. Everybody knows oil is finite; whether it costs $30 or $300 a barrel, there won't be any for us...
You forgot
F. All of the above
G. The Large Hadron Collider (LHC) will produce a black hole that only swallows toxic debt.
But, they gotta fix it first. That is expected to take months. What we are more likely to get is a white hole that spits out an unlimited quantity of toxic debt.
Yes, we're seeing more volatility and we need a wider spread or the poll will be weekly. My suggestion: $100-200. Look at marginal costs of the most expensive barrels skidding to market as the bottom. I've argued that anything under 100 is artificial at this point. But with this latest bailout, US currency approaching a rapid descent changes the whole picture. 200 may be too low as an upper limit. We got a taste today and you only have to go back one day in the news to see how many experts got it wrong and got blind-sided by the bailout extravaganza. Maybe 100-250 would be better. That's for three months.
Yikes. $200 is a bit extreme, let alone $250.
The way the markets are, and the exchange rates, I reckon it is 50-50 on oil staying within the range of $1-$1,000 for the next six weeks until the US election.
No economy = no market for oil, but OTOH hyper-inflation in the dollar or a strike on Iran might put the price up considerably, until folk realise that they might not have an economy anymore.
The situation is clearer if we vote on what the price of oil will be in the Zimbabwean currency, as it is more predictable.
Well, I wouldn't be surprised if we are nearing the 'decoupling' of the dollar from oil. Are you ready to be further impoverished? Once the Euro (or other) becomes the currency for oil trading, the dollar and all dollar assets can take their place next to, or behind, other 'developing' or 'unraveling' countries, perhaps below Zimbabwean currency and assets. As for oil going above $200 in the next three months, "This is a big price tag because it's a big problem." Remember, there was a time when Good Germans found themselves carting wheelbarrows full of Deutchmarks to buy loaves of bread. $200 for 25,000 hours of human labor is dirt cheap. So, in the world of energy and entropy, oil is still being given away--and for increasingly-worthless paper! Buy your wheelbarrow NOW.
Anyone any idea how significant this is? It is clear it is bad for the dollar, and currency stability:
http://www.telegraph.co.uk/finance/economics/3062121/US-dollar-set-to-be...
I wish I knew more, trying to sort out what is going on in the financial markets if you are a neophyte is like trying to disentangle a particularly thick thieves' patois. But it is clear that the intention is to leave nothing unplundered.
I hear that the total value of 401's is around $3.7trn, so presumably that is next for lunch.
perhaps this would be about the right time Bush and co to announce the north american union, then switching to the new amero currency and at the same time introduce the rf-chip, aka real-id to the new union so as to know who is here.
by the way, i was talkng to fellow co-workers and mentioned what if
congress borrowed from your 401k for this bail out? and they said that would probably start the next revolution. as there would be riots in the streets.
there was talk of congress wanting to access to borrow from our 401k's in the early 90's. but never happened.
Actually they are already implementing the technology to chip you through your driver's license. That will be the day I start driving without a license.
Suggested new format:
"The front contract expired today, closing at $XXX. Within the next thirty days the trading range for the new front contract will be: +/-10%, +/-20%, +/-30%".
Interesting idea, but I don't want to stray too far from PG's format while he's away. Maybe for the next poll...
The new poll is up.
Hello VK,
I might also add that some people prefer to hug their bag of NPK, too:
http://www.signonsandiego.com/news/business/20080922-0429-fertiliser-out...
--------------------
Fertilizer prices stay high as supply lags demand
...“Because supply and demand fundamentals are so incredibly tight, supply and demand fundamentals are a much bigger factor than production costs,” Rabobank analyst Joost Hazelhoff said.
-------------------
We are evolved to sit in the dark, but starvation is the insurmountable hurdle [see Haiti, Zimbabwe, etc]. Even through great FF pricing volatility, but mostly upward, people continually place a premium on I-NPK by food purchases.
Too bad our tax dollars are not buying the stocks of agricultural companies, afterall, job specialization depends upon food surpluses and I-NPK is nothing more than transformed FFs. My speculative 'Federal Reserve Banks of I-NPK' could have gotten a tremendous $700 billion dollar boost.
My guess is many of the Banker Boyz are shifting some of their ill-gotten gains into I-NPK stocks. The last thing these people want to do is to actually have to manual labor in a field. They hope to make another financial killing plus achieve 'Elemental Control' [see prior discussion in archives] so that they can force us and our children to do the stoop labor instead.
"Make us your slaves--Just feed us!"
Just remember that a farmer will trade for either I-NPK and/or O-NPK as there are No Substitutes to these Elements to leverage photosynthesis above a Liebig Minimum. Recall that the original banks held grain, not electronic zeroes and one.
A crust of bread has incredible power politically embedded within-- recall Tadeusz Borowski, #119198.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
If they are prevented from paying dividends and the equity is marked to zero, how do the banks get bailed out?
Is it going to cost money, sure.
But the losses already happened.
We can also leave them alone, and then the same losses have to be paid via recapitalizing FDIC when they blow all at once.
It's really not a question of spending the money, it's gone.
It's a question of giving one guy full authority to force mark to market right now and unwind, or letting it go to shit all at once.
The only fix is clarity and all cards open face on the table.
It is quite possible that what they intend to do is virtually identical to what Denninger is proposing.
The only additions to the bill should be ones clawing back bonuses paid to executives and employees of the banks that were based on false valuations. No recourse.
Force them to mark to market?! The agency being proposed is free to buy assets at whatever price it wants, and it sure as hell won't be fair market price. The purpose here isn't to force these institutions to take losses, it's to funnel them money.
A lot of people still don't get it. IMO this one is like the Iraq war-the politicians who are opposing this one (few in number) will be bragging about it for years, all the others will be saying they were misled. 7 trillion wouldn't be a surprise as the total taxpayer loss on this one.
I see flaws in your reasoning too, BMW.
There are two underlying problems here:
1) The people of the United States, cumulatively, in the past couple of years have consumed about 6.5% more than they have produced. But this is not something that happened overnight, it comes on top of almost three decades of consuming more than we produce.
2) As a result of decades of consuming more than we have produced, we have accumulated huge debts.
Firstly, I question your assertion that "in the end it is not the banks who get bailed out, it is actually the consumer, who will be again able to (at least this is the plan) to take loans and spend money on stupid things."
But even if your assertion is correct, are we to believe an appropriate response would be for us to support an expenditure of $700 billion of taxpayer money, including those taxpayers of us who do not over-consume, so the over-consumers can keep on over-consuming like there's no tommorrow?
Your argument is internally inconsistent. The solution proposed does not address the underlying problems.
Another thing, BMW. You paint with a rather broad brush when you use that word "consumer." Let's take a look at the numbers.
There are approximately 116 million households in the US.
Of those approximately 1/3 do not own their home. That means about 39 million households rent.
That leaves 2/3 who own their home, and of those approximately 1/3, or 26 million households, own their home outright--they owe nothing on their home.
I don't have any figures on this, but let me venture a wild guess and say that, of those who do have a mortgage, half are in good shape with their debt-to-equity and/or don't have any problems making their payments. That's another 26 million households.
So here's how it adds up:
People who rent--39 million
People who owe nothing on their home--26 million
People who are in good shape on their mortgage--26 million
Total "consumers" who would not benefit directly from the bailout--91 million
Total "consumers" who might benefit from the bailout--25 million
So tell me again, using your logic, why I and 78% of America's households that are fiscally sound should support this? It's not our responsibility to keep extending unlimited amounts of money to consumer junkies and their dealers and enablers (the banks), with absolutely no requirement that they curtail their addiction. Granted, maybe cold turkey isn't the best solution. But the solution proposed by the Bush administration? Give me a break!
Oh, but I forgot. "You're either with us or against us!"
Maybe I should put it again: I am absolutely against any bailout. I just want to rationalize it. It makes me sick as anyone else here that people who over indulge with their spending will be given another round of dope (and 80% of sound consumers will pay up). You have to agree though, that the society we have today is built around consumer. We can change that, of course, but until we absolutely have to, we probably will not. Of course one day the game will have to stop. I think that if you cut off that 25 million of crazy consumers, the world we know would change a lot. Not only for them, but also for other people, because their standard of living often is a function of disfunctional consumers spending.
IMO you are swallowing the bait by thinking that this is about the USA consumer-that is a side effect, collateral damage. The whole intent of the legislation is to directly transfer taxpayer money to connected insiders, thus Paulson's adamance that no oversight or limits can be placed on executive compensation or fees charged to the taxpayer.
Once a mortgage goes to foreclosure it is worth the auction value of the property behind it, the face value may be much higher as some homes were sold where the mortgage payments were more than double local area rents.
If the government gets toxic loans, it will need to set up an agency or trust to sell off the properties it takes in foreclosure. A glut of property on the market will drive prices down.
In 1989 the Feds formed the RTC to take over properties of banks and S&L's that went belly up after a lesser round of real estate speculation. There was a catchy phrase called "creative financing." It was like very little money down and easy credit terms. Easy come easy go.
Indeed, I don't even understand why executives should be compensated at all.
That just makes no sense to me at all.
If there is to be a bailout, with taxpayers money being used to releave troubled financial institutions from carrying distressed "toxic" CDOs, then isn't the fact that they can trade the toxic waste on their books for cash enough of a reward by itself?
Or am I understanding incorrectly that "compensation of executives" means that executives will personally receive big bonus payments under this program?
I really can't see how giving company execs big bonusses for screwing up in the first place makes any sense, or how it is going to help the situation.
If someone can make sense of this, please explain.
Corporate executives care more about how much money they can pocket than the stability of their companies. If the government buys the toxic loans, then the banks will receive large amounts of cash, more than the bad loans are worth. Without a restriction, the board of directors, composed of the executives, of the banks would use this money to give themselves billions of dollars in bonuses. These crooks feed themselves first, and it only makes sense to the greedy people receiving the bonuses.
By finding dupes to buy bankrupt notes the exec's can stay in business and continue their high-roller lifestyles. It is in effect saving their jobs. Those who are expert at bankrupting companies should not be given hundreds of billions more to play with. The investment banks that did not reach the brink of bankruptcy should be allowed to take over instead of notorious losers being given hundreds of billions in hard earned tax payer money.
I see some problems with the numbers, but this may be nitpicky.
I've heard that 33% of all residential RE is owned free and clear. That's a portion of the total 116M. Your numbers assume that none of the rental properties are owned outright. Conversely, they also assume that none of the rental properties are in arrears. I would think that straight rentals are irrelevant. The property they occupy must be owned by someone.
So, properties owned outright - ~39M.
Properties mortgaged - ~77M.
I don't think that a person's equity position in their home should matter. Can they make the payments is real question. Given that, data shows that only 6.41% of US mortgages are delinquent.
So, I'd estimate that only ~5M mortgage holders are in real trouble.
But the mortgage market is like the dehydration in the human body. You don't need to lose a big percentage before big problems occur.
But if we accept that the recession will become serious, then a lot more households will slip under the water. I can see why that isn't discussed; we're not allowed to draw conclusions that will lead to panic.
Look out for a new law to arrest anyone who tries to walk out on their now-federalized mortgage.
What recession? Dontchaknow the economy is basically sound?
Headline of the day from Bloomberg: U.S. Stocks Tumble on Concern Bailout Won't Stop Recession. I thought that was pretty funny on multiple levels.
Like the laws promulgated at the tail-end of the Roman Empire which required agricultural workers to stay on the latifundia.
Will this new law become the basis of a new serfdom?
The way it should be, look at Europe, the RE loans are recourse.
They can work it off picking lettuce after the illegals are shipped home.
Did you calculate for people who had paid off their first mortgage but have a reverse mortgage?
Also, the averages say Americans move house something like once every 7 years, so that could mean that roughly 50% of them moved house in the last 3-1/2 years. This means your 'half in good shape' with their debt/equity might be too high since today minus 3.5 years is mid-bubble, not pre-bubble.
This is a in effect consumer society. In the end it is not the banks who get bailed out, it is actually the consumer, who will be again able to (at least this is the plan) to take loans and spend money on stupid things.
And without consumption various taxing schemes go south.
Not to mention that taking tax money (that would be American's money) and handing it off to others means that PART of that money leaves the US of A.
To 'chase' goods in other lands. Like, oh, say oil.
This won't start the banks lending again. There's nobody else left who's creditworthy enough to lend to, 'consumers' don't have the means of servicing any more debt.
All this seems to do is transfer money from the poor to the rich (via future tax obligations and inflation) before the whole thing collapses.
If a depression liquidates a large amount of debt the Gini coeffient will probably fall closer to 0 (perfect equality). Which it did during the Great Depression (see here).
I think the elite are trying to save their relative wealth, that's all.
So elites ceased to exist in 1929? I don't think so. Gini measures incomes, right?
Yes, Gini measures income and not wealth and - as you know - the elite didn't cease to exist, but their relative income did fall in the years after 1929. I'm sure they are opposed to that, and will do what they can to minimise the extent to which it happens this time.
Where does the treasury get this $700 billion from anyway? Doesn't it borrow it at interest (by issuing treasury bonds) from the same wealthy elite it is actually being given to?
It's perverse, and hardly anyone notices.
I kind of get the idea its just going to materialize, kind of like the money for the short term loans the Fed was giving at The Auction Facility that dematerializes when its paid back.
Somebody educate me.
Are you joking? You actually believe this is going to benefit consumers? How do consumers benefit? Paying for the excesses of the elite? Watching our purchasing power shrink away to nothing? Having the gov't own our homes? Having to abandon god-knows-what present and future programs to service a debt that is not ours?
Ah, yes, the problem wasn't Hitler, it was Nazism. The problem with Iraq isn't Bush and Cheney, it's fundamentalism and fanaticsm...
Unbelievable.
Cheers
Maybe you're right. I would be perfectly happy if the majority of banks go bankrupt (and hey, this is probably the outcome if they do nothing). But then - business die, real estate goes down, people lose jobs. How is this beneficial to the consumer?
If they ran the bail out in the same way as they did the RTC in the 80's, companies would have to go through bankruptcy, and the fat cats who have screwed things up would not remain in charge.
However, what the government did was to use taxpayers money to put liquidity into the system, so that overall people were able to get loans etc.
It is the difference between a perfectly reasonable plan to keep the economy collapsing, and the present scam which is a naked power grab, is entirely unconstitutional as it explicitly rejects the arbitration of the courts and which is solely for the benefit of the same criminals who have creamed off billions whilst wrecking the economy and people's lives.
What DM said, plus: A downturn can be recovered from, the destruction of a system cannot.
Cheers
Agreed. I couldn't understand one thing though, how much has Bush burnt in war against terror? It has to be much more than trillion, right? Taxpayers didn't mind that?
This 700b seem like a chump change (granted, it is 700b at any given moment...). In any case, I wonder if the care for taxpayers was on the same level back then.
how much has Bush burnt in war against terror? It has to be much more than trillion, right? Taxpayers didn't mind that?
Plenty of taxpayers minded. Its just that the pain of that spending was not in the here and now.
Don't forget nuclear space frisbees. The only logical counter force solution for nuclear space terrorists and their invisibility turbans. Cheap at $1 billion a copy. Whammo!
First, this isn't as simple as the dollar amounts. We are talking about fundamental changes to the way this nation is run, to the distribution of wealth, separation of powers...
And don't forget the cost of Iraq was supposed to be something like 50 billion. Had you told the taxpayers it would cost trillions,it would never have happened. (At least I'd like to think so...)
And,as you point out, the 700B isn't really going to be 700B. It will be trillions. The Keating 5 crap was supposed to cost 20 billion and cost 160 b.
Cheers
"The Keating 5 crap was supposed to cost 20 billion and cost 160 b."
oh yes, the keating 5, and who was that senator that was tangled up in the keating 5 ? hmmmmm.............. yea that white haired ex pow guy............damn i cant remember his name..........from that southwestern arid state ari........arizo....yes that's it :arizona but what was his name mc ???? mcgeaser yes i think that is it.
I would like to state that while I got suckered into thinking our actions in Afghanastan were OK, I NEVER was fooled into thinking that attacking IRAQ was a necessary or prudent action by any stretch of the means. I would like to think that there are plenty of others who didn't buy the lies of WMD's.
We were setting up to attack Afghanistan during the Clinton administration. Lots of military aid to the 'Stans to the north, and to Massoud in Afghanistan in his struggle against the Kaboul government.
9/11 happened the day after Massoud got taken out by Al Queda. In return the Taliban gave them sanctuary against the US response for 9/11. My sister pointed out that Massoud was the main supplier for heroin after the Taliban banned poppy production in 2000. Only Massoud's Panjsheer valley was still wall to wall poppies in 2001. She thinks the Mob financed 9/11. I think she's paranoid, but it is an odd coincidence. I've also noticed that the FBI is spending a lot of time and money chasing down and prosecuting retired Mafiosi.
Now poppies grow all over Afghanistan. I hear the poppy fields are quite pretty, row on row.
The good news is, peak oil is achieving what the war on drugs could not. Food is now so expensive that farmers are giving up on poppies and coca. There's better money in food.
The trillion we wasted then is a main cause of the trillion we must spend now.
How did Bush create support for his War on Everyone? He told us to keep shopping and forget about universal sacrifice.
How did Bush obtain tax revenue to pay for his War? Greenspan supercharged the economy via housing bubble, the government lied about CPI causing bracket creep, and foreign capitalists and states bought vast amounts of US debt to preserve the status quo.
What did the financial beneficiaries of the War invest in? Good question, but I bet in 2004-2007 real estate development, wacky derivatives and cheerleading mergers looked good.
What were the effects of the War? People rushed out to buy SUVs with low-interest loans and drove straight into the oil production plateau, sending prices skyrocketing, wiping out all these other scams to keep them spending.
There are many more ways that the War hurt us, but suffice it to say that future historians will draw a direct line from 9/11 to Iraq to the current crisis, by following the money.
But it isn't just $700b. That is just for the current package before congress. In the last month the US has put up $1.8 trillion.
See: A $1.8 Trillion Bailout: Where the Money's Going
And that just as of now.
I can not log into my Bank of America account this morning - should I be worried?
Francois
I had trouble logging into my bank account this weekend, too. I think it was just heavy traffic. I got in and got my transaction done, but it was really, really slow.
One of the talking heads on CNN said that they're seeing a lot more traffic on their investment web site. Nobody's withdrawing their money yet, but a lot of people are checking in, keeping on eye on it. Thinking about whether to panic and rush for the exits, I assume.
Actually the thing that caused the bankers to believe the end was nigh on Wednesday was a run on the money market funds. EVERYONE was pulling their funds out. People don't realize how close it actually came to a total crash. That said, The financial system did this to themselves and it needs to fail. Their sole purpose is to 'harvest' wealth from everyone else. Time for the subjugation to end.
Just a note...the money market funds that suffered huge outflows last week are not the same as the money market accounts most people have through their banks.
Definitely...why would they have a choice?
Isn't it a bailout...ie. here is money to save you -or- go bankrupt?
So is the other option that the banks are holding the government hostage...bail us out or we will crash the economy...and make it juicy.
Hmmm...looks possible.
(So is the other option that the banks are holding the government hostage...bail us out or we will crash the economy)
thats exactly how it looks. the banks are saying, pay us now this lump sum, or else the american people will suffer so badly, that they had wished they had payed us sooner.
far as I can see the banks are in a win win situation. either way they get their bailout money, they are going to either get it up front, or wait 10, 20 or 30 years of interest payments made back to them. which is where they would suffer the most. we the tax payers would actually suffer the most, it's just the banks would struggle a lot longer till its paid.
either way, it looks dire for the tax payer.
depression here we come.
Paul Krugman's commentary today says it all. We've been told over and over that Paulson and friends have made fixes in the financial mess, but each time, the mess has grown.
Do you really trust these guys to fix things now, especially as they want to be given dictatorial powers without oversight? Remember the old saying, "Absolute Power Corrupts Absolutely"?
My reply is NO, NOT AGAIN!
E. Swanson
Recently, these bailouts have taken place on the weekends. THAT is why we're in this mess in the first place: the people at the Fed and Treasury no longer observe banker's hours.
I, for one, will strictly observer banker's hours today. Purely, mind you, for reasons of patriotic duty.
;-D
Never trust a skinny chef & never trust a banker who works on weekends.
Certainly no one is condoning the Old Testament laws that command that investment bank CEOs be punished for absurd reasons such as golden parachuting on the Sabbath? (sarcasm off)
Gretchen Morgenson's column yesterday is also worthwhile:
http://www.nytimes.com/2008/09/21/business/21gret.html?scp=2&sq=gretchen...
as well as her interview with Bill Moyers:
http://www.pbs.org/moyers/journal/09192008/watch.html
transcript here:
http://www.pbs.org/moyers/journal/09192008/watch.html
I just listened to the Bill Moyers interview from your link. It was great. It mentioned that the Government now owns 80% of AIG. In effect, the company has now been nationalized. A quote from Floyd Norris from the interview:
Right! The amazing thing is all this is happening on the watch of a Right Wing Republican President. The world is turned upside down. I think this is an act of desperation on the part of the party in power. This prevents, at least in their opinion, a total collapse of the economy. Perhaps, perhaps not. Anyway, as McCain said, all this is above my pay grade so I will not attempt to analyze it.
But I will say that past actions by the fed, dropping interest rates to ridiculously low levels in an attempt to keep the economy booming was a major cause of the debacle. And a total lack of banking regulations also was a major contributor. Real estate prices were booming and everyone wanted to make a mint by buying then "flipping" their investment to make a fortune, (something for nothing), was another cause. Rates were so low and loans were so damn easy to get, everyone tried to make a mint in the real estate market.
Then the housing bubble collapsed and the jig was up. It all really pisses me off. There was greed, greed by people trying to get rich as real estate markets soared. Then the greedy got burned. And we all, us taxpayers, are the ones to suffer.
Perhaps this is the beginning of the end. Sad.
Ron Patterson
Do you really think there is more than one party? More than just an economic elite which pull strings behind the curtain, with a facade of 2 parties to give us an illusion of choice? Keep the masses quiet by entertaining them with false issues and distracting them with virtual scandals and making them think their vote and opinion really matter. Did anyone note what color lipstick Sarah Palin was wearing this week?
cynically,
ej
"...what color lipstick Sarah Palin was wearing this week?"
pit bull pink ?
petunia perriwinkle ?
porcine redwine ?
NO! Ron. Not the beginning of the end. Not "sad."
The beginning of a new day. There is now a chance to end the tyranny of the Eastern Establishment as they self destruct and fall on their swords. It is up to the people of this country to force their Congressional leaders to allow the collapse of the greasy, avaricious, unprincipled would-be Masters of the Universe. It is time to stand up and say NO.
Chaos is frightening; many people are comforted more by the security of tyranny than the freedom of liberty.
The way this one comes down will pretty much define the meaning of "democracy" for the indefinite future.
Not sad, Ron. Exhilarating.
In spite of the +2 as I post this, I nominate this as the most brain dead post of the day.
Todd
That is entirely unfair. I am not the most "power of positive thinking" guy out there by any stretch, but there is something to be said for the opportunity this presents to remake the future. Out of ashes (almost) always comes rebirth, and that is more likely to be true if there are people working to make it true. It should be said I am, at my core, an idealist, so the idea a better society can be had appeals to me. And, really, if that is not the case, then what's the point?
Cheers
Agreed! let the chips fall. we will all be better off. it may be tough, but it will get better.
Ron,
I've had this crazy idea in the last few months, that as net energy into the US economy shrinks and our indebtedness catches up with us, more and more critical industries will fail, and they will be nationalized by the government as a last resort. I suppose I could call it "Disaster Socialism." Potentially, the government will become more and more financially burdened with supporting losing industries to the point that the government itself defaults.
This idea is not that crazy but you have to remember who is leading the Federal Reserve. 'Helicopter' Ben Bernanke made his career studying the Great Depression and drew the conclusion that the banks and the government at that time and again during the Japanese banking/real estate bust did not supply enough liquidity.
I fully expect him to do everything within his power to flood the system with money in an attempt to avoid falling into the debt deflation trap where he no longer has any tools. He will be battling deflationary dynamics with inflationary tools. Thus, I expect to see a see-saw battle between inflation like we had last winter, and deflation like we're seeing now. I think this see-saw will swing back and forth a few times before a winner is declared but IMHO it is inflation that will win in the end and we will see at least Argentinian style inflation in a few years. We could also be unfortunate enough to have both at the same time with housing/stocks decreasing in price while globally fungible commodities increase in price. Ouch!
I recommend taking out insurance against such an outcome by having some of your portfolio in precious metals -- physical gold an silver.
my 2¢
-- Jon
(Click to see Helicopter Ben)
Can one fit $700 Bil onto a helicopter...? But hey- just as long as they're not Blackwater helicopters, we'll be OK... And make sure you fuel them up from someplace other than the southeast- might be in line for a while...
Yes, you are likely right about Bernanke printing money - he made a remark to this effect in 2002 (see the quote in my opinion piece on an oil-price timeline to depression, basically written from a 2005 perspective)
http://www.naturalhub.com/slweb/fading_of_the_oil_economy_depression_tim...
Lorenzo
Bernanke believes that if the Fed had been more creative in 1929-30 the depression could have been avoided.Looks like he's going to put that theory in to practice.
As far as I'm concerned that phrase "Something for nothing" is the core of it all. A nation that believes, as the US does, in "Something for nothing" is bound to end up with far too many people doing exactly that. No society can survive with this many unproductive people. Unless of course it finds huge amounts of fossil fuel energy available for relatively no cost. But then there may be a problem if that energy starts to run out..... Oh, wait....
There's more resistance than I expected.
Mad as hell - taxpayers lash out
For the first time ever I've contacted all three of my congresscritters. Unfortunately, I don't really think it matters what Americans think. Congress will smear some lipstick on the pig, pass it, and go on recess so they can campaign to keep their jobs.
I knew you people would somehow drag Palin into this. /sarconal
Why the hell have you got three congresscritters?? sounds like two too many to me. how many congresscritters does it take to vote for a pork barrel?
Most Americans have three. One representative and two senators.
Congress consists of two houses: the House of Representatives and the Senate. Everyone living in one of the 50 states has 1 representative and 2 senators, hence 3 congresscritters.
Indeed. It's the "balance of powers" thing. For Tony and other non-USans...small states were worried about being steamrolled by larger ones. Hence the Senate, where each state has equal power. Representatives, OTOH, are based on population, with some states having dozens, and others having only one. They are reallocated after the census (which takes place every ten years).
US citizens who do not have three congress critters include residents of the District of Columbia, and residents of US territories like Puerto Rico.
This is the reason Bush won the 2000 election even though he got less votes than Gore. Each US state has electoral votes equal to its number of senators and representatives. This means low-population states have outsized power, since they have at least two senators regardless of the number of voters who reside there.
With the exception of course of DC, which gets 3 electoral votes despite having no congressional representation.
Last time D.C. was lobbying hard to get a representative they made one of their license plates read, "Taxation without representation" on the bottom, which is true. (Although, I bet in sum total they receive more federal money than they pay.) When Clinton was president, he had those license plates put on all the white house limos. When Bush came in, he took 'em off: D.C. votes democratic.
Yup, I even have a set of those plates I kept from an old car as a souvenir.
The redneck vote is increased by the extra senators, but it is decreased by urban domination of states that have large redneck minorities, like New York, Pennsylvania, California, etc.
We could split the big states into small states and give them more senators, but then the rednecks in the rural areas would have not just their own senators but also their own representatives and vote them for themselves.
It all comes out about even in the Presidential election.
Thanks Leanan, I should have realised that congress criters included senate critters!
it's all clear now !!! I suppose these rules were introduced when there were only three people in each state:-) Two representatives still sounds like one too many to me.
Would you like an explanation of the rules of cricket?
Evidently not loud enough - and certaily nto as loud as the lobbyists.
Congress scrambles on rescue bill
I sent loud and clear "NO!" messages to my congress critters, letting them know that this issue angers me to such a great extent that I will vote against them and publish their voting history on the matter to as many people as possible. All of congress needs to be voted OUT! (That, and get rid of the lobbyists somehow.)
Congress is in danger of getting troubled HELOC and 2nd mortgages that are no longer backed by any equity as the first mortgage takes priority. Basically taxing everything they can see, borrowing any funds that are liquid, and then buying worthless junk at half price. Jet setting representatives piling up a mountain of debt and devaluing the dollar. America needs a balanced budget, not entiitlements for CEO's who lost billions, and credit to those not worthy of credit.
Voting them all out will simply create 469 new lobbyists overnight. (The full house plus 34 senators).
Worrying about who our congresscriminals are is an implicit expectation of some form of BAU. OK, fine. The only way this can have any kind of long-term utility is if the American people assert their primacy.
This might entail:
- voting all out who are not, for lack of a better term, Mr. Smiths. As in, Mr. Smith Goes to Washington. People would need to look around and find the most honest, ethical person they know, regardless of experience. They can learn parliamentary procedure, and their common sense, visceral understanding of things would see them in good stead. There are always experts to consult with. However, it must be noted that few congresscriminals are experts in anything. Their job is not to be expert, it is to have insight and discernment. Our Mr. Smiths could do this.
- Call a constitutional convention to change several evils: eliminate the Fed and the Electoral College, the elimination of personhood for corporations, the prohibition of signing statements, an expansion of the explicit list of types of crimes that can be considered treason, a more explicit list of crimes/actions that can lead to impeachment, the raising of congressional salaries and benefits only by either a.) popular vote or b.) tying them to the real purchasing power of typical Americans, making all congresscriminals subject to recall/impeachment, making all non-personal donations to congresscriminals illegal and limiting all donations to $100, and, finally, reducing the election period to no more than 60 days as is the case in Britain and Ireland.
- Communities must attempt to unite and become activist. We must be involved in the process. The NH model is a good one, I think. And our congresscriminals must spend the bulk of their time in their districts/states. This can be expedited by making use of teleconferencing. They would go to Washington only for work on issues of exceptional importance.
- Any activity by any elected official that violates the public trust should be considered treason.
- Open primaries. The monopoly over elections that the demons and repukes hold is a violation of our right to vote.
- A ban on donations by political parties. They should be ideological groupings only. They should not have a monetary impact ion elections.
- A ban on campaign ads by any but the person running, or an equal time requirement. You make an ad, your opponent gets one, too. And you pay for it. Or, no ads whatsoever; only public forums/debates so money is not a factor.
Etc...
(If my memory of this morning functions): Alabama's US Senator Shelby (R) made a good point on limiting compensation packages for CEOs if they accept taxpayer's funds. Sorry, I don't have a link.
Senator Dodd and Rep. Boehner were incredible in ABC This Week yesterday.
http://abcnews.go.com/Video/playerIndex?id=5849818
With about 3:00 minutes remaining Stephanopolous asks what they think will happen if they don't enact the bailout. Dodd says "I don't want to use the language ... because the language has a lot of impact." Boehner says "You can't describe on a Sunday Morning how ugly this picture would look if we don't act."
The Bush administration "warned" us about the dire consequences of a failure to act against Iraq's weapons programs. We were to trust them, without being told the evidence. Remember the smoking gun/mushroom cloud?
Now this. No doubt it's bad, but UNSPEAKABLE? C'mon, we're not children.
'We're not children..'
You're right, we're not. But we are frequently afraid that we (or they) are, that we can't take the hard truths.. so that we keep finding reasons not to tell each other the truth as we see it. 'TMI, dude, don't harsh my buzz.'
American Movies are practically forbidden from having tragic endings, reporting 'Bad News' or challenging opinions is anathema.. we are parasitically entrenched in 'Optimism', because anything else seems like an open invitation for Death or Bedevilment. If we speak of those things, we would be exiled and forever reviled..or worse, just laughed at.
Sadly, the inability to work near the middle of this, where you can play with the Paradoxes that jump from Disaster to Opportunity and back again, means we feel we have to jump into 'Doomer and Cornucopian' camps.. then there is barely a chance to play with the boundaries between them, since people are entrenched in one camp or the other, and any kind of equivocation or compromise becomes a betrayal of your commitment to that extreme position..
'Engineer: The glass isn't half full or half empty, you just have a glass that's twice as big as you needed..'
Thanks for the link, Round Tripper.
Abominable performance on the part of both.
I must say I am more dissappointed in Dodd that I am in Boehner. After all, the Republicans are the party of the economic elite. But the Democrats are supposed to be the champions of the little guy.
So not only is Dodd guilty of encouraging this massive looting of the public treasury, but also the additional sins of hypocrysy and betrayal.
Keep in mind that Dodd is a Connecticut senator. If you have a credit card, there's a good chance the address on the back is a PO box in CT. And it's not because the state laws favor consumers there.
Why is it?
Because the state is has lender-friendly laws, rather than consumer-friendly laws.
ahh. thanks.
Perhaps their biggest fear is that a lot of incumbents would be voted out of office.
I would say it's their only fear. I'll even vote for Obama if he stands up and OPPOSES this, but of course with all his contributions coming from Lehman brothers it is a distinct possibility he will oppose it because his guys didn't get bailed out and for that reason alone. If there is any hope for the democrats, they will stall this in Congress until the market crashes, nothing can stop it now anyway. BTW, our Oklahoma delegation is collecting polls, you might want to try yours and let them know how you feel.
I truly believe that this is Paulson's way of taking care his friends, nothing less or more.
BTW, George Bush's philosophy can hardly be called right wing. Don't insult us like that, we don't claim him. My best guess is that his philosophy could be called "cronyism" and "I don't listen to nobody". A true right wing politician would have let everything crash, which would atleast leave a legitimate foundation in the future. The only thing this will do is prolong the agony and leave a trashed foundation. LET THEM DIE!
Bailout Detroit, atleast they can actually make something which is more than you can say for any of wall street. 600billion would also revitalize alot of industries, which is desperately needed now.
What a disgrace!
They need to cover their own asses.
McCain elected = Presidential pardons for all.
Obama elected = Doubtful.
Cheney sure is keeping his head down through all this, yes?
No, Obama will just pardon his friends, McCain will only pardon his.
No difference, just different sides of the coin.
Cheney would let Wall Street fail, his boys aren't there.
jrc--
I think the Bush regime is worried about prosecution, and a McSame victory would help their ability to stay beyond the law.
Most can be brought to trial on war crimes in any international court, and most developed countries. With the new government in Paraguay, extradition seems possible, if one can defeat their personal armies (Blackwater, etc, will run huge sections of these countries, and like their nazi counterparts, many may be protected)
War crime trials are so Twentieth century!
Why, the Japanese were accused of perpetrating a 'Day which will live forever in infamy' just for attacking without a formal declaration of war!
We have come a long way since that, with the Bush doctrine of pre-emptive strikes, moving on from habeus corpus, and a little judicious waterboarding.
That's progress!
I'd really like some of that good stuff you're drinking...:-) if you think for a second Obama would allow Bush to be procecuted. He's a Harvard law guy, and he also knows that he could be procecuted the same way. He also knows most Democrats, ie Joe Biden have rubber stamped everything that came their way under Bush. Not to mention, turning any American over to an International Court will possibly cause a military coup.
All in All, not a chance, Washington always protects their own. Obama's "change" is just some nice campaign slogan. He's never stuck his neck out for anything or done the right thing and I wouldn't expect him to start now. So share some of that good booze eh?
Bush or Cheney don't have to go to Paraguay, Texas and Wyoming will be just fine after the election and probably after oil is really depleted too.
One merely has to look at the complete lack of an impeachment against Wto see that Congress is complicit in W's actions. He should have been tried in court alongside Saddam.
As during all other national crises, he has been whisked off to an undisclosed location...
Well, Cheny was in Chattanooga Saturday giving a speech for the 145th anniversary of the Battle of Chickamauga and was presented with a painting of his great-grandfather who fought on the union side. I do not believe he stayed around for the re-enactment of the battle over the weekend however. Does that count as keeping your head down?
WRT: Does that count as keeping your head down?
LOL! I bet he wanted to shoot someone else in the face, but the event planners wisely did not invite him to participate. I bet he got pissed off, then left early. :)
Cheney probably doesn't like muzzle loaders, too slow to reload. He was also the only guy in Texas who would shoot a lawyer and feel bad about it.
Consider the definition of "right-wing". The term comes from the parliament of the French monarchy, in which members were arranged by the social class they represented; the Church and the feudal landlords sat on the king's right.
Now does a feudal landlord support or oppose big government? Trick question: he only supports himself. He wants the government to be exactly strong enough to take what he wants from others, and not strong enough for others to take from him. Which is only rational.
So in one century the right wing may support the execution of little boys who steal bread (private property), and in another it may demand laissez faire to fire all the workers in a town. In peace it requires low taxes, in war it expects fat contracts. A Magna Carta at times, a Louis XIV at others. All you need ask of any proposed measure is not its ideological label, but what it eventually does to the distribution of power between citizens (which starts with wealth).
I can see why foreigners can't figure out where Americans are coming from. They have always understood that class is real and worth killing over, while unregulated markets are a theory that you pull like a sock puppet over your gauntlet then discard when it's time to smash someone's face in.
TPTB do the same thing with race and nationality. When at war to seize assets patriotism and racial cohesion are the response demanded from the masses, so 'gooks' are fought, not Vietnamese.
OTOH when cheap labour is required, then any desire to not compete with hugely cheaper Chinese labour, or to resist cheap labour from Mexico to pick vegetables is denounced as racist, and we are told that American's would not do the job.
Obviously they have failed 101 economics, as what it would do is raise the wages paid until American's were ready to do the job.
The last thing they want is higher wages though, as it hits profits, so any expression of dissent is ruthlessly crushed by branding it racist.
Perhaps this has been obvious to others and I missed their comments but it just occured to me reading your post. Not that I think either major party will make a wit of change nor do I suppert either, but interesting, Bear Sterns gets bailed out. Lehman, a primary backer of Obama is next in trouble and suddely it is all talk about moral hazard. Lehman's hung out to dry and their is no problem with the 30,000 + who went home Friday and on Monday have no job and their savings wiped out. Since then everyone else, to the tune of if needed over a trillion is bailed out. That's the neocon, Bush cabal I know.
CNN spells it out:
It reads like a car that's run out of gas and friction is bringing it to a stop. No matter how much the government steps on the gas (to pump money into the economy), the car is still slowing down. We overheated the economy, just like we fault other, developing nations (like China) of doing. And soon, the car will be stopped and the slow process of walking to the gas station in 110 degree heat will wear us down. Should have stopped for fuel earlier, but we were in such a hurry.
When do you suppose the World Bank and the IMF will step in to impose "structural adjustment?"
But a $700Billion bailout is not likely to add enough gas to your car.
Then you'll know the US is about to be broken up and its assets sold.
Now. That is why it is not a bailout. The money is already lost. They are just discussing how it will be implemented.
If thats the case then look at my post in yesterday's drumbeat for a good example of what will happen based on what they have done to other country's.
My advice, go to your local camping store and buy them out on water filter's and storage containers.
To some extent it will. That's why they are trying so hard to install a black president. One of the first things that will have to be cut are the welfare entitlements that are used to disproportionate degree in the inner cities. They are trying to avoid riots.
Willingness to enforce the law would be a much better course of action.
Ummm, perhaps a citation, or a reference, or one of those linky-things?
Or even just a crafted argument.
Cause when you just go spouting off with ugly little one-liners like that it just makes you look like...well...like a bigot.
They're also used to a disproportionate degree in rural areas in the south and west. Is Obama going to help there, too?
Compare the flooding in Texas with NOLA, in areas that have even a minimal respect for the law the insurrections are minimal.
That's not a fair comparison. New Orleans was a far worse catastrophe.
Even with the bailout, the housing market will still head downward.
The average salary can't cover the loans; the prices that they are asking for today's real estate are really too high.
Even with the bailout, the housing market will still head downward.
Words of wisdom given to me WRT housing prices - when loans are easy to get, housing prices go up.
Thus with loans hard to get, the price will go down.
We're just getting started on the housing market crash. We're a long way from the bottom on prices (unless things really turned around over the weekend).
An example:
All those bank own properties need to pony up their taxes at the end of the year (still several months away, by my calendar). The reason the banks own the properties is the purchaser defaulted, of course, so there is little if anything in escrow.
Who's going to pay all the (millions, billions?) in property taxes? The failed and failing banks?
I smell another bailout coming.
That is why Paulson has asked for a $1.6trn or so increase in the permitted Fed deficit, and the $750bn is on a rolling basis.
No more authority needed to take all your money, and all you will ever earn, and give it to the bankers.
all you will ever earn, and give it to the bankers.
30 mins of hate over bankers
http://www.achieveradio.com/cash-flow
I don't understand how it works in other areas. In my town (and all over Vermont), we vote on the school budget and the municipal budgets directly, as a certain number of dollars for the year. Then that burden is divided amongst the households as property tax in proportion to the RELATIVE values of the houses. I.e., if all houses were suddenly worth half as much as before, everybody's tax bills (in dollars, not "tax rate") would stay exactly the same!
That said, when people imagined their houses were worth a lot, and could be sold some day (after the kids graduate from the expensive local school system), they were willing to pay more, and thus passed unsustainble budgets. Now that people FEEL less rich (in the same house with the same mortgage), they may balk. Actually I hope they do, the sooner we stop the exponential (and faster-than-inflation) rise in spending the less painful the withdrawal will be.
That is not the case in most states. In Hawaii, school funding comes from the state budget. I believe this not uncommon in western states. It's seen as more fair, since each school gets the same amount of money per student.
In the older northeast, schools are often paid for with property taxes. Property or specific school taxes are a fixed percentage of the value of the property. This means older people on fixed incomes may eventually be forced to sell, if their pensions don't keep up with inflation. Even if the home's paid off, they can't pay the taxes.
The unfairness of this system is that wealthy neighborhoods with high property values will have fancy schools with swimming pools, new computers, etc., while poor neighborhoods have ratty schools without working toilets.
Another problem you run into with this system is that only home owners pay. Often people who own homes no longer have children in school, so they resist any increase. Renters who are often younger and more likely to have school age children don't pay property taxes (at least not directly) and so vote for big increases.
CNN ran a story last night about the latest trend in schooling: switching your kid from private to public schools. Private schools, like public ones, are facing sharply higher costs and are being forced to raise tuition. Parents are struggling, too, and can't pay. The family they interviewed pulled their kids when their private school went from $7,000/year to $12,000/year - per child.
Renters pay property tax too - indirectly as part of their rent, since the landlords pay the tax.
Here in Vermont a complicated system has been put in place to make the funding of schools not totally reflect local (town level) property wealth. The state moves money around between towns so as to equalize the per-student-spending possible for a given tax RATE. Towns still vote on their local school budget, and they end up paying the same tax RATE (payment per year as a percentage of the value of the house) as any other town with the same per-student spending. The tax rates are NOT fixed, and still only reflect RELATIVE property values, except on a statewide scale. I.e., if all the houses in one town double in value while all the other houses in the state maintain the same value, the people in that one town will pay twice as much. But if values in the whole state double then taxe payments remain the same.
That's why I said "not directly."
Most people have leases that lock the rent in for a year. They aren't going to see an immediate increase. Most landlords are reluctant to raise the rent too much on existing customers.
The tenants may have moved on before they're hit with any rent increase.
The CNN item reveals a financial "system" utterly broken because its fundamentals are in dire straits. Companies needing/requiring short-term loans "to meet payroll or pay their bills" are essentially insolvent--the behavior is the same as a household needing/requiring credit card debt to cover routine expenses; both are essentially examples of NOT living within your means. Personal bankruptcy and business failure in the past were treated as "Lessons Learned," and US social norms generally provided for one instance of failure to learn the appropriate lesson, which was not expected to happen again. But we now have the THIRD violation of this norm within the past 20 years, and the repeated promises of both Wall Street and the Executive branch of the federal government saying just bail us out--AGAIN--and we promise not to need another; but if "we" allow the system to work "normally" to punish the failures and re-regulate the abusers, then that would be a catasthrophy and ALL will be lost.
We've had 28 years of borrow and spend political-economy emmanate from Depravity Central, where the only stuff that trickles down is toxic sewage. Tha National Debt is an alltime high, and upper-tax rates at an all time low, while far too many corporations pay little or no tax yet ask for their amount of dole to increase yearly. IMO, the WHOLE structure of finance in the USA is broken beyond repair, its collapse encouraged, and a new democratic and egalitarian system built on its wreckage--something very similar to what ought to happen to the way medical care "system" is alloted and paid for. Such a collapse might also allow for the renewal of the rationale and compostion of the USA's national government.
I don't trust ANYONE at the federal level to do what's right and proper. Better for the current "system" of the FED and its relations to FAIL, while creating a new banking and finance system that's centered in the US Treasury Department and controlled by the people, not the investment banks. So DEATH to the secret FED-based banking "system" and its criminal partners, and LIFE to a democratic fiancial system that promotes the interests of the People first, and Big Business last.
Not to hijack this DB with more financial carp but…
Total mortgage debt meltdown estimated value a couple trillion give or take, all of which is based on REAL property.
Total derivative debt meltdown estimated at upwards of $500 TRILLION to a Quadrillion, based on BLUE SKY.
The only thing that should be “bailed out” are real mortgages attached to real property.
Everyone else in the financial industry can just borrow from each other to pay off their debts, plus a little extra for their salary, and a little more so they can keep betting .LOL
One other idea. Take the whole $700 billion and put it on black and give the wheel a good spin.
Cheers!
To put this into perspective, Thom Harmann was talking on his radio show about the $500 TRILLION derivative trash cash and pointed out that world GDP is only about $54 TRILLION! 700 billion is a drop in the derivative ocean.
Thom also mentioned that the $500 TRILLION number may be "conservative", some European commentators are saying the slime pit is closer to $1,000 TRILLION. Like oil reserve #s, nobody knows for sure.
Thom has been on the leading edge of many issues. He was the first one who turned me onto Peak Oil back 10 years ago with "The Last Hours of Ancient Sunlight". I am literally praying that if Obama is elected that he will bring Thom into his inner circle as advisor or cabinet member.
One particularly powerful point about Thom's perspective is that he's liberal and deeply spiritual too. His ethics are backed by lots of personal humanitarian work that he has done.
When I see numbers like $500 TRILLION and $1,000 TRILLION, prayer seems to be the only answer. Prayer and lots of people learning the truth about how deep this mess it.
That's a deeply misleading number.
If I owe you $1T, you owe Bob $1T, and Bob owes me $1T, then there is $3T in gross debt outstanding, but the net amount of debt is zero. If, for some reason, the same person (or government) came to hold all three of those debts, they'd cancel out to zero debt.
The overall net debt in the derivatives market was estimated by Fitch Ratings at about $1T; if we're worried about a bailout, that's the number to look at.
I have said it a million times but the problem is that these financial firms haven't been run like businesses for quite a while now. Here Paulson illustrates another example: upper management of these firms would rather have the company go under than accept any sort of limitation on their absurd personal compensation. The owners (shareholders) of these firms are absolutely powerless-all they can do is sell their shares (which they have been doing in droves)-now the taxpayer has to support these bloated parasites.
But Mr. Paulson said that he was concerned that imposing limits on the compensation of executives could discourage companies from participating in the program.
Well then get new executives. If they're willing to see total collapse before a compensation cut, then I think they'll find themselves answering some very awkward questions to their shareholders.
Good Point!
Bar them from office for the rest of their lives. I think they should also forfeit any pension arangements that have been made.
Agree, but even if they worked for free, it wouldn't make any difference. Zillions of dollars of real money are about to be thrown into a black hole of phony "derivatives."
Let's not lose the forest for the trees. Even though justice would require that Bernanke and the Friends of Hank should work for soldiers' wages. After all, this is partly due to the "war on terrorism."
Some animals are always more equal than others.
I admire Paulson's gall. The gun should be pointed towards those executives and not at Congress.
As the CSNY song goes - "It's been a long time coming...".
Srivathsa
A minor correction - this is not a $700bn bailout - it is $700bn at ANY ONE TIME!
In fact, if he has a fancy to do so, Paulson could expand up to the new limit of Federal spending - around $1.8trn.
The best article I have so far seen is by David Merkil, and explains that the critical difference between this and the RTC on which it is ostensibly based is that the RTC required firms to have gone through bankruptcy, and assured systemic liquidity without bailing out the management or shareholders:
http://seekingalpha.com/article/96491-oppose-the-treasury-s-bailout-plan...
Paulson, in contrast, seeks to 'attract' companies to his scheme by paying over market rates, and would leave the company and management in place, aside for his administrators presumably being hired at vast cost from teh same places that caused the problem.
This is an unconstitutional scam - to fight it, if you are American, please give David support by writing in opposition to your Congressperson,as he asks.
He is not just taking a pot-shot, as he has his own moderate and sensible proposals to reconstitute the RTC to deal with insolvent companies. Details on the link.
There's no way the claw-back can be allowed. If we dig into the fraudulent mark-to-market book-keeping that supported the bonuses a lot of VERY IMPORTANT PEOPLE would have to go to jail.
Instead... let's have a Talking Heads re-union tour.
The Hand Speaks.
It seems to me that it would help to require that no more than $0.10 on the dollar be paid for the securities and that the whole liability be part of the deal. We don't want just the defaulted home equity line of credit, but the first and second mortgages as well. Then, we can come into clear title for the underlying assets and go ahead and do some economic stimulus by upgrading the homes to zero net energy homes before selling them. This removes the homes from the market for a while and reduces the housing supply while at the same time promising to meet future housing demand with superior product. This keeps the building industry focused on retrofitting rather than new construction for a while so that we can reduce the glut of structures.
With this kind of program, I think we can expect to recover our money.
Chris
That is an excellent idea - unfortunately far too sensible to be actioned, and it is also directed amiss - it would help the country, and not give any profit or enable any more control by the banking classes.
I agree with your approach as well re .10 on the dollar. However, I have heard some analysts state that the bailout will only work if the Gov pays close to full value (way more than they're worth) on the toxic stuff. It's for that reason, and much more, that I am against the bailout in its present form.
Well, I did get this at the top of the comments on today's editorial in the NYT: http://community.nytimes.com/article/comments/2008/09/23/opinion/23tue1....
Vote it up if you like it.
I've got a more direct approach here: cut mortgage interest rate 1.5 points. http://www.theoildrum.com/node/4561#comment-412354
Chirs
"Divine Right" AKA "The Bush Doctrine"
("Après moi, le déluge")
And it looks like the deluge has just started - right on schedule.
Après moi, le déluge
You know, you just gave the only ACCURATE description of the Bush Doctrine I have heard. He really is the only true "compassionate conservative". I know those of us on the right are going to be loading up the big'uns if we ever hear these two words together again. Too many of us realize "Oh that's what he meant???"
How about this:
We take the 700 billion and start a new bank unencumbered by all the cr*p the old banks are stuck with. The Gov can use its influence and some cash to "elevate" some of the smaller better run banks into the major leagues and finally we can sweet talk the likes of Warren Buffet to use a few of his billions to start a bank. We could have a whole new banking sector, they could keep the wheels of industry turning even while the old banks collapse and we would have some hope of actually getting some of the money back.
Or how about this:
700 billion exceeds the market cap of Bank of America, City group ,JP Morgan, Goldman Sachs, Wells Fargo, Lehman Brothers, Merrill Lynch, and UBS combined with change left over for any I missed. Why don't we do a forced buy we would get all the assets that way not just the crappy ones
Won't happen though, this is coup not a bailout.
Say what you will about "Silent Cal" Coolidge, he did have a few good things to say:
The thing is, "living within one's means" just happens to be the key to economic well being - for individuals and households, for businesses, for governments, and for entire economies.
We all know that at the root of our energy problems is a failure to live within our means. We are not living within the limits of the flux that renewable energy sources provide, and we are not conserving our non-renewable resources as the valuable capital assets that they actually are. We all know that this cannot go on this way forever, and indeed not for very much longer at all now.
A similar truth applies in the financial realm. Cut through all of the denial and obfuscation, and at the very root of this crisis is a simple truth: "We the people", individually and collectively, have not been living within our means. As the late Herb Stein said, "If something can't go on forever, then it won't". Well, we've reached that point where it doesn't go on any further. Consequences have become not just theoretical, speculative, and future, but real, certain, and present.
What do we do? The answer should be obvious: We must now start living within our means.
Actually, we must live a little below our means, because we are going to have to generate surpluses to dig ourselves out of this hole by paying down the accumulated debts, as well as to save for the inevitable rainy day in the future.
When I say "We", I do mean we - all of us. This isn't just a federal government problem or a Wall Street problem. This entire country is going to have to go on a fiscal diet and live within its means, and that is going to require that the amount of money available for discretionary expenditure by individuals and households are going to have to go down. (And yes, that means that we really can't afford any longer to buy so much junk from overseas that we really don't need anyway.) Yes, this will mean very painful and disruptive economic dislocations. They will be happening anyway, one way or another, we are just swallowing a pack of lies to think that there is any way to avoid it. It is time to get on with it and swallow our medicine.
It is going to mean that governments are going to have to cut their budgets, meaning that there will be a lot of things that we were hoping or counting on the government doing for us that we will now have to be doing for ourselves, or doing without. We can only afford for government at all levels to do those few, highest priority things that we truly need, and to do them well and efficiently. It is time for lot of waste and nonsense to be discarded. It also means that it is time to get back to just having a defense that defends, rather than throwing resources we don't have down the black hole of global neo-imperialist interventionism.
This also means that it is time to cut the crap in the financial sector. Our economy can no longer afford to divert scarce funds to activities that destroy rather than create value. It has been all too easy to gamble with Other People's Money. It is time to require that from now on, those with fiduciary responsibility for managing Other People's Money fulfill their duties responsibility and prudentially, which means only investing funds after doing due diligence (and yes, really understanding the instruments they are buying) and not taking on risks that are higher than what their investors expect. If people want to speculate, let them do it with their own money, not mine or anyone else's. If they do speculate and lose, then that's their problem; this country can't afford to bail out any more speculators, no matter how confusing and convoluted the gambles or how well connected the gamblers.
And as for energy, it is time to make renewable energy production and energy efficiency our top national priorities. We have got to do everything we possibly can to get to zero energy imports as quickly as possible. Reality will do it for us soon enough - the avalanche has already broken loose and is heading down the mountain; we had best start running downhill NOW, as quickly as possible, and hope that we can move fast enough to keep it from gaining on us. This will cost a lot of money, which is why we need to cut out so much of this wasteful crap. It also means that we are actually going to have to do things that are uncomfortable and maybe even downright painful, and thus very unpopular.
I don't hear anyone talking this way, and don't expect to. But it is the truth, and there is no other way out of this mess.
To what degree will you enforce this "living within your own means" doctrine. Are you going to deny welfare benefits to those who have and will lose their jobs due to the economic contraction? Very few of these people were the ones buying and selling all those bogus securities which the brokers already made big commissions on. Will you let their children starve and freeze in the dark out in a cardboard box under the bridge? How about our disabled veterans who were drafted and put in danger as the alternative to prison? What about our senior citizens who spent 40 to 50 years of their lives doing hard low paid work and could never afford to put one cent into any investment plan? How many people will your stinginess kill and will you put your head on the block first? When you get too sick to work and can't afford the meds will you simply "live within your means" and go without care?
As if government is going broke spending for those truly in need, rather than trying to keep its owners' Ponzi scheme alive ... Those functions you mention are what any government should consider essential, along with true defense, sound infrastructure, and a just judicial system. And any citizen living under such a government should be willing to pay their fair share of whatever it takes to provide such services, or to renounce their citizenship.
WNC is dead on the money. At root, the way in which each and every single one of us, individually, lives our lives is the cause of our predicament. It's shameful to admit personal responsibility, but until each one of us does so, and then makes the necessary changes in our own lives, we will never get anything but more of the same.
Sadly, WNC is also right about the unpopularity of such notions. As a people, we are so immured in a "something for nothing" and "me first" ethos that any other standard is unthinkable. Maybe some of the shocks that are coming will wake some people out of their wet dreams - but I think most will go down wondering what they did wrong. This nation is plumb eat up with the dumb-ass, at all levels.
Thomas:
Last I had checked, nobody had appointed me czar. Thus, I am afraid that I, personally, will be unable to enforce anything. All I can do is try to see to my own efforts to live within my means.
We have many people in this country that are very hard up, mostly through no fault of their own. Of course we don't want them to suffer any more, and of course we want to try to do what we can to help them. I would argue that some of this suffering may actually be a consequence of life in a country that is not living within its means.
"Living within our means" does not necessarilly imply a society that is governed by the law of the jungle, every person for themselves. It does mean that there is only so much to go around, and that however the less fortunate are helped, it has to be done within the limits of the resources available.
Actually, this type of “reasoning” has a name. It’s called “Divine Right:”
it has another name, more to do with bovine than divine.
bovine or equine, take your pick.
The private sector's response to oil depletion has been prompt (in many cases).
These will be unveiled this week:
Caterpillar to Introduce Electric Mining Trucks
uhm......what about the diesel generator onboard?
At least this leaves the option for devising other powering schemes for these vehicles. (And don't forget, Liquid fuels won't be gone, just far more precious/rarified.)
I wonder if there are systems designed that string an electric distribution line across a worksite which has a 'Runner' that rides on these cables like a Seat on a Skiresort Chair-lift, and then tethers to the vehicle like a dog on a 'Run', giving them a little more mobile freedom than the Trolleycar-model of rigidly using overhead wires.
Bob
I have learned from Alan here on TOD that the thing you are talking about is a pantograph or trolley pole.
Thanks, D;
I've seen those, I'm envisioning a cable that runs much higher over a jobsite, maybe 75-100 feet up, (much higher still as you descend into valleys, etc) where the vehicle can spool in and out the excess, and there is a rider-commutator actually hanging on the supply lines, possibly even self-driven so that it maintains its position over the truck.
I'm just playing..
Bob
No, that is electric transmission, not an electric power source. Those trucks will operate the way our current trains do: diesel engines run generators that power electric motors.
There is still no real solution for the energy density issue: http://www.theoildrum.com/node/3442
Trains can be connected to power lines. Trucks, not so much.
Mining trucks won't be a problem. They don't go far and they take the exact route hour after hour, day after day. Something could be rigged up with power lines.
But I do take your point about diesel being the current power source. However eliminating it doesn't require any ground-breaking tech.
But it does. There is currently no battery technology that would power these big mothers for more than a few minutes, an hour or so at most. Then they would require several hours of recharging. And the battery bank would weigh tons. It would take ground-breaking battery technology to make these trucks totally electric.
Dunno how it compares with these mining industry machines, but they are using at least fair-sized medium mothers in Los Angeles port!
http://www.treehugger.com/files/2008/06/world-most-powerful-electric-tru...
According to the video they can get up to sixty miles on one charge and take only a few hours to recharge! And lets not forget these guys are carrying containers on mostly flat smooth roadways. A little different from carrying tons of dirt out of a half mile strip mining crater.
There is a place for very short haul electric trucks, like the Port of Los Angeles where the terrain is flat and the distances are short. Don't think they would work in the mining industry however.
Darwinian -
If I understand correctly, the new big Cat on-site mining truck does not have rechargable batteries, but rather will take its power from overhead lines, in much the same way that an electric train does (but with more freedom of side-to-side movement).
I would imagine that this approach is practicable only because these monster trucks travel on a rigidly fixed course, back and forth all day long. And when the active mine face advances, the power lines can relocated accordingly, as the supports are probably designed with that express capability in mind.
A highly specialized application of electric motive power to be sure, but a step in the right direction, i.e., away from liquid fossil fuel.
I would suggest that you are all trying to solve the wrong problem.
The issue is not "How can we power our huge mining machines" but rather "How can we do the things we need to do with less mined product, so we don't need as many big mining machines".
I think the answer to the second question will save more diesel than the answer to the first.
I think working on both the ocnservation and the innovation ends are a necessity at this point.
Hello Consumer,
Your Question: "How can we do the things we need to do with less mined product, so we don't need as many big mining machines?"
My PostPeak Answer:
http://web.archive.org/web/19960101-re_/http://www.uni-kiel.de/sino/ar/s...
Just to be clear, as others have pointed out, the new electric-drive mining trucks still use onboard diesel engines to generate the electricity (as diesel locomotives do). Caterpillar hasn't announced any electric truck that uses overhead lines etc.
I, too, was misled on this when I introduced the topic. The fault lies with the source, Green Car Congress Blog, which used the term "electric trucks" rather too loosely. There is actually nothing in Caterpillar's press release that indicates these developments are a response to high oil prices or CO2 emissions.
However, I still think these trucks advance the feasibility of electrifying the entire mining process since, as you, others and myself have said, for this application it's not hard to envision powerlines attached to vehicles (replacing the onboard diesel engine).
Hey, just to chime in on what others have already observed, but this story is pretty much complete misleading sensationalism. The largest mining trucks have always been electrified in this way. IIRC, the reason for this is that the diesel engine can't put enough torque to move the really big equipment. You can read all about how they work here
Datamunger -
You are correct. I should have checked that story out more carefully, as it was somewhat misleading.
I actually thought that all of those big mining trucks were diesel-electric drive, but evidently some of the smaller one are mechanical drive (most likely some sort of huge fluid-coupling automatic transmission). So when Catepillar announced that their new big one would only be available in electric drive, I assumed it was a true electric drive, like an electric train.
It would seem, though, that a mining truck with a true electric drive would be feasible for the very large applications, where the truck just plodded from point A to point B and back again on a very narrow route all day long. Perhaps overhead lines in combination with some sort of tether that would allow the truck to wander a short distance from the path of the power lines during loading and unloading operations?
You dreamers with your BAU minds need you heads read.
Electric haul Trucks! What a load of absolute crap. Plug em' in like an 120v electric lamp. They move through water and mud. I'd love to drive one of those suckers (not).
You must think the mine face stays in the same place, and every truck proceeds to and from the same place, for maintenance and crew change.
You say small distances...................relative to what?
5 km round trip is that small? 10 km round trip, is that large. Open pits are deep and wind down through many turns.
The trucks have rubber tires and bounce like a coiled spring.
Still thinking that engineering and technology will save the day and allow BAU?
Like hell, that's what got us where we are. Now you want the same to reverse the trend.
For pity's sake get a grip get out of denial, and allow yourself to think clearly.
You must be thinking mining companies can switch to electric over night, just take the money from petty cash or the great profits obtained from mega sales, due to the booming economy and the wealthy consumers cashed up with their higher wages and handouts from the government.
There won't be any money money for feasibility studies let alone R& D
As I said before we need another post telling us how electric trains and nuclear power will save us and how France will be an Island of plenty in a sea of want because of same. (That was gross sarcasm).
Except that as indyphil pointed out in this thread, trolleys involving truly massive trucks in open pit mines have been used off and on for decades. Check his link for the history and pics.
History of Electric Trucks
Believe it, or not, this is an electric truck which runs on a trolley:
http://hutnyak.com/Trolley/Photos/Rossing/RossingBrochure.JPG
I'd include the image itself, but Leanan might slap my wrist for bandwidth wastage as there is already a pic in this thread.
Bandits, you may need to re-familiarize yourself with large mining equipment.
Most haul trucks at major mines are all diesel-electric already. Mechanical transmissions are very inefficient and troublesome...an electric motor generates maximum torque at zero velocity. Yes, the active mine face does move around a lot, but the main haul road out of the pit stays the same, as does the haul route to the dump and ore stockpile.
Newmont Mining built their own coal-fired power plant to supply electricity to their mining operations, including overhead trolley-style electric power for their haul trucks. Barrick does likewise I believe. Diesel operation is still needed in pit and away from main haul roads.
As to your other points, I remain mute.
The damn haulpaks use diesel for fuel just as locomotives do, they use an ICE.
Do you call locomotives electric because they have traction motors driven by a diesel driven alternator?
There are diesel electric locomotives and electric locomotives. The diesel electric loco's require to carry their own fuel, as would electric haulpaks so they can move off the electrified path, unless they get towed by another ICE vehicle.
Depending what is mined the mine face moves and haulroads change, if electric haulpaks were so good they would be used extensively.
The very nature of the haulpaks means they move massive amounts of material, including overburden which accounts for more than the actual ore which is mined. The overburden goes to a different stockpile and that moves as well.
http://en.wikipedia.org/wiki/Surface_mining
Read that and you will understand why electric haulpaks are a joke.
As far as I can make out all they are good for is a substitute conveyor belt.
The very, very few that were/are used require unique circumstances and a long pit life to justify the infrastructure.
If less ore is required because of the economic downturn you can be certain electric haulpaks will not be the solution to declining profits.
No...I called them diesel-electric; what everyone else calls them too. I understand how they work
Well it is true that the active mining face moves, and sometimes haulroads are reoriented, but the main ramp out of the pit is pretty much fixed
This is true in the past, but the whole point of this discussion is how peak oil will effect things going forward. My point was that the same trucks running diesel today could be retrofitted for trolley electric along ramps and main haulroads without the neccessity of replacing the truck fleet. They would switch from grid electric to diesel electric as needed. This is the system that Barrick used at the Goldstrike Mine in Nevada several years ago.
And a Mea Culpa...I was wrong about Newmont using trolley electric at their mines in the Carlin Trend; according to a friend at Newmont, there have been discussion only. I should know better than to believe idle talk in bars. The Stray Dog in Elko is like the House of the Rising Sun for geologists.
I suggest you check out:
http://www.balqon.com/ for electric trucks that are used at ports and the like.
This is already the case for a large amount of mining equipment out there.
Naturally, those are generally stationary machines. Like the big scraping machines, cranes, etc. There's something obviously dangerous about dragging 24 kV lines all around a mining site where people are working. But still, lots of those electrical powered stationary machines are movable. The only real barrier to use them on trucks is management of the stuff.
It's not unthinkable to electrify the hulking beasts of mining operations.
No, not unthinkable. But maybe we should be thinking more about how to power our farming equipment.
I'm much more concerned about how we're going to feed 300 million Americans during the next 10 years.
In the special case of agricultural equipment, biogas or biofuels should do a good job and can be made near where it is used - pig farms, for instance, produce vast quantities of manure, which is currently wasted.
A lot of good work has been done in that direction in Germany.
Bio-gas from manure on large dairy or pig farms is a great idea that seems to be gaining popularity in the midwest.
The local Ag-exstention people tell me the main problem is that it is not yet economical for farms under ~500 head.
"I'm much more concerned about how we're going to feed 300 million Americans during the next 10 years."
Lots of small electric farms would be a good start to easing the burden. There are dozens of sites with good information on electric tractors and farming on the web.
sources for information about small tractors and related products
http://www.andrew.cmu.edu/user/kb13/misc.htm ,
Electric vs Biofuels:
http://evmaine.org/html/farm_tractors.html
I work for Caterpillar, therefore I need to be careful what I say on a public forum. But I can comfirm a few things and clear up some of the assumptions here.
Electric drive mining trucks have been around for a while. Komatsu makes them for example (using MTU-detroit diesel engines for power). Caterpillar prouldy builds the largest mechanical drive trucks in the world, but have not until this point built electric drive trucks.
Although the wheels are turned by electric motors, the electric power comes from a diesel engine. There are Pros and Cons to this arrangement:
Pros:
The engine can operate at a fixed operating speed, this enables tighter turbo matching (for that speed) and yields greater ENGINE efficiencies and performance capability (including altitude capability and power output).
Electric drive trucks do not need complex transmissions with torque convertors etc...
Cons:
Although the transmission is eliminated there are losses to be accounted for. There are generator losses, and also losses in the motors and cables. Once these losses are accounted for the efficiency of the vehicle is comparable to a mechanical drive truck in older designs it was actually less efficient.
Recent improvements in the technology are showing that electric drive trucks may start to show an improvement in efficiency. bear in mind that these trucks work hard and burn MASSIVE amounts of fuel - like over 100 gallons per hour. So a 1% improvement in efficiency is worth a good deal of money.
The news from Caterpillar does not represent a sea change in the mining industry, but merely a paradigm shift for the worlds largest supplier.
There are some cases where electric drive trucks have been hooked up to overhead cables. http://hutnyak.com/Trolley/trolleyhistory.html
Caterpillar is now able to enter this market where before we were not able to.
I am a Diesel engine designer(Senior design engineer with CAT for 10 years). I have worked on the design of the engines in these and other trucks. Although I work for Caterpillar I should point out that I do not represent Caterpillar on this forum, therefore these opinions are my own and not those of Caterpillar Inc... Blah blah.
As a side note, Caterpillar is an interesting company to watch as we go through the next 5 to 10 years. Although we build engines and trucks that consume fuel, we supply them to customers who are primarily in the business of extracting resources. As the prices of the resources soar, our business has been going rather well. We dont just supply mining business for the extraction of minerals, but we also supply engines to companies like Halliburton and Schlumberger for the purposes of pumping and fracturing oil and gas wells. In fact a full 1/3 of Caterpillars loose diesel engine commerical sales in 2007 went to the petroleum industry (that's in our annual report)
Guess whos trucks get used by Syncrude in the Alberta Tar sands?
In addition we are an exporter, which means we benefit from the current weak dollar situation. Customers from other countries dominate the business since thats where the majority of the resources lie (Russia, Africa, Australia)
I just got back from Australia as it happens ;)
SWEET!
Your link clearly confirms the idea that we can use electric power to power these machines in some capacity. But I'm confused by one little detail.
Do you mean the diesel generator is located on the truck itself? If you're using overhead lines, then why wouldn't you just buy some 80$/MWh electricity from the electricity company instead of engaging in the expensive activity of running your own mid-size generator?
I understand that the new on board generator-electric trucks are less efficient, but if you're getting the electricity from the grid, things change entirely and would be energy-wise vastly more efficient. The only problem is that it's not a simple task to set up overhead lines. Right?
Thanks for helping clarify!
And also for the useful link......
Here's the money shot from your page providing proof of concept for electric trucks in mining.
Actually, reading more of the page, it more than a proof of concept. It's a completely feasible way of mining that has been extensively tested and used operationally for many years in various parts of the world.
Where is it?
Who manufactured the trucks?
How much do the trucks and infrastructure cost?
What generates the electricity?
What Mining company?
What ore is being hauled?
How much ore is hauled by this method daily, monthly, yearly ?
Does the truck also have a diesel engine?
If you read back through the thread you would find many of the answers to that which you ask.
Googling from that information would also provide you more data.
Lukoil reverse course
Only 3 months ago on June 7th, Lukoil projected 1.2% to 1.7% oil output growth for 2008 (which was already reduced from an earlier forecast of 1.8% to 2% growth): http://www.reuters.com/article/rbssEnergyNews/idUSL0770683020080607
However few days ago Lukoil announced that it would have no output growth at all for 2008, and the reason being the continued decline in its western Siberia oil fields:
http://steelguru.com/news/index/2008/09/20/NjM2NjY%3D/Lukoil_not_to_rais...
and as of the first half of 2008, Lukoil output is down by 3.1%, accordingly I bet that by year end they will show a net decline in oil output and not even match 2007 production levels.
Regards,
Nawar
So... Russia peaked?
Around 1988, I believe.
Yeppers... The reason I asked before is that it looked like they were going up post-peak, and that there would be a second (potentially higher) peak- like two camel humps, I guess...
But, it now sounds like the second hump will be shorter than the first... An extraordinarily bad situation...
RE: Power protests in Dayton, OH
It is the case that power is being restored here slowly. More slowly than one would expect. I have been fortunate (I lost power for about 6 hours total), but I have several co-workers here who have gone without power since the 14th. It is hard to stay in good humor after a week of cold showers and candles.
I suspect that the excess line crews are all in Texas, and that is slowing progress here. Though, far be it from the Dayton Daily News to look into that.
Yes, some here predicted that.
When there's a big power outage, utility crews come from all over the country. With their trucks. You gotta wonder how sustainable that's going to be in the post-carbon age.
I'm sure this is no comfort, but don't feel too bad. This is likely to become common for most metro areas IMO and on the bright side, you will be among the first to learn to cope.
Just look at the cycle of load shedding/brownouts that has developed in some developing world cities - like South Africa, or Pakistan.
The US is likely just a few years behind them on the down-curve.
As for "staying in good humor" - read articles about/from those cities/regions to get a look at their living conditions and the kinds of civil breakdowns that occur.
We are just starting to experience the symptoms of the Creeping Collapse.
Instead of stocks, we're thinking about investing in goold old fashioned salt, might make a ton when everyone with a freezer needs to make jerkey because the power is out.
Interesting presentation from Peter Wells (Neftex Petroleum Consultants, Ltd) last night at the ASPO conference called "OPEC - Dilemmas, Issues and Responses." He's been working with Toyota for over a decade and apparently Toyota got peak oil in 1992...and the result was the Prius, which first came out in 1996.
He then walked us through his model, based heavily on the IHS database and with very good historical correlation. His global liquids peak is around 2015. Aside from the interesting insight that Toyota is making and has been making business decisions based on peak oil, here are a few more notes about his presentation:
The presentation was excellent, the questions came fast and furious and he answered them all capably. He is not likely to read this, but I certainly appreciated him flying in from Dubai and spending time with us.
The other sessions I attended yesterday were also top notch...a great start to the conference.
-André
Thanks for the update! Is anyone else blogging from the conference?
Chris Nelder and I were talking about live blogging, but the connection we both have is not functioning in the meeting room. Looks like Jeffrey is posting, too, though.
Post and near peak modifications to ELM?
You have got me wondering, they obviously have a lot of bright guys and a lot of resources at Toyota, and perhaps they have a more sophisticated version of ELM.
The projected rates of increase in internal consumption and hence reduction in exports of exporting counties are based on historical precedent, but there is one glaring difference to what has gone before - peak.
In a pre-peak world, where oil prices are relatively static, then allowing consumption to rise fast makes a certain amount of sense to industrialise and so forth.
In a post peak world or a near peak world then the costs and benefits change, and it would make good sense for the remaining exporters to increase prices internally so as to minimise the increase in consumption and draw things our rather more.
It seems possible that Russia will increase it's prices, modelling themselves on the Norwegian model, but much more doubtful for the Gulf States and Saudi.
If any of you folks attending ASPO get to see Lisa Margonelli, (Author of 'Oil on the Brain') I'd love to hear how her presentation went.
Slightly OT, but we graduated from High School together, and we're having a reunion this weekend in Maine that she'll miss, so I wanted to let other classmates know what she's up to.. AND to wedge it into a conversation about Peak Oil. If I can offer these old friends anything, it would be a chance to think seriously about what's probably heading down the pike at us, and how we might try to get ready for it.
Go Lisa!
Bob Fiske
Portland, Maine
Bob, I was in a different session yesterday. Someone else will have to give you that review.
Thanks, Andre'
Wish I were there.
Bob
Regarding Wells' assertion that OPEC is producing at a smaller depletion rate (percentage of recoverable reserves produced per year) than is non-OPEC, note that this is only accurate if their reserve estimates are accurate.
And based on the HL model, Saudi Arabia is going to show three straight years of lower oil production (relative to their 2005 annual rate), at about the same stage of depletion at which the prior swing producer, Texas, peaked. I did think that Wells' assertion that North Ghawar would be effectively watered out in two years was interesting.
He answered an export question at the end. He basically said rising consumption was a concern, but he thought that exporters would act to reduce their domestic consumption. Of course, as I have previously pointed out, if Export Land had no increase in consumption instead of an increase of +2.5%/year, they would go to zero net oil exports in 14 years instead of 9 years.
Yes, he did discuss it in the Q&A section. I was just surprised it didn't make it into the main presentation.
Re: the 14 vs. nine years, Herman Franssen, International Energy Associates, just said that the latest IEA projection is down to .5 mmbd increase in demand for 2009. He thinks their outlook will be no increase in consumption by the end of the year. So we may get that extra time you mention.
For Toyota, as a global corporation, the main impact of ELM (in the early years) is a shift of some of their business from oil-importing countries to oil-exporting ones. Why should they care?
They would care for a couple of reasons that I can immediately think of: the relative population sizes and purchasing capacity, and the types of vehicles that these nations are likely to buy. Their strategy would change accordingly.
Matt Simmons just finished speaking now. That's him, off in the distance at the podium.
Approx. 515 attendees as of noon.
Matt has been trying to warn the world for some time--> the jump in crude pricing today during his speech seems like instant validation.
Could be :-).
Forgot to mention that Matt said that Tanaka has given Fatih permission to say what needs to be said and let the chips fall where they may.
Could you expand on who these people are, aangel?
Thanks.
Those are the IEA big wigs.
Nobuo Tanaka is the head of the IEA. Fatih Birol is the chief economist of the IEA.
There's been some talk about the IEA being overly politicized. I would guess that's ending.
Or they're trying to make everyone think that...
I don't think that the IEA will admit peak oil in their next World Energy Outlook - even if they found much higher decline rates than they expected before. In one of their last oil market reports they had a section about these decline rates and a new explanation coined "adjusted decline": They firmly declared that the oil supply problems are not due to geological limitations but due to a set of above ground problems (lack of investments, political problems etc.) and that the encountered decline rate has to be adjusted accordingly.
But I have the impression that the agency at least is taking the supply issue more serious than before. For example recently they were hiring "a Senior Oil Market Analyst to examine developments in, and future prospects for, global oil supplies and production" with a "university degree in geology, petroleum engineering, economics, or other numerate discipline".
I would suggest they hire the three TopTODers of SS, F_F, and Euan!
geology or petroleum engineering, good
economics, not so much...
I think someone needs to take a trip to Texas. Or Indonesia. Or the North Sea. Or Mexico. Or...(Insert name of declining country here)
Congratulations to all the winners of the M. King Hubbert award for peak oil education!
- Julian Darley, Global Public Media
- The people behind The Oil Drum
- John Theobold, UC Davis
Our lunch keynote finished speaking a few minutes ago.
Jim Buckee, former CEO of Talisman Energy
Showed slide extreme field size distribution on the basis of reserves, with three fields dominating (Ghawar, Burgan, Cantarell).
Fundamentally, anything under 100 million barrels really doesn't count.
97% of world known reserves are in 10% of the fields.
On Oil Field Declines
"They decline" <-- remember this!
On average, oilfields decline after 50% reserves produced and decline at ca. 10%/year. This depends on reservoir complexity.
The discussion has been is the depletion rate 2%, 5% or 8%? What does that mean?
--> In ten years time we need to replace 50-60 million barrels of oil or 6 Saudi Arabias.
--> the rate is problem but so is the sheer volume
The majority of the world's oil is in the Middle East.
Saudi Arabia's geology is simple: very layered and also well-explored. Talisman didn't go into Saudi Arabia [could have been "when gasoline spiked"] because we didn't think we would find anything there.
Ghawar is 174 miles by 16 miles
STOOIP 190bn bbls
Reserves are 80-90 bn bbls
Cumulative production 53 bn bbls, 27.9% STOOIP
59-66% EURR
"If this field isn't in decline, it's right there."
Tales from Insiders
Sadad al Husseini = "natural declines in existing capacity are real" getting to 12 mmb/d would "wreak havoc within a decade"
Chairman Farouk Al-Zanki : Burgan "peak output in 2007 1.7 mmb/d not 2"
Said charitably, their claimed numbers are "unexamined."
"If the big fields are in trouble, the world is in trouble. And of course exports decline faster than production."
Why Majors are Quiet on Peak Oil
- In big companies CEOs are advised by economists: "if the price of oil goes up enough, more oil will appear in the ground" (said with touch of mischief in his voice)
- Advisors say "There is plenty if we could get at it"
Improved recovery heavy oil sub arctic etc. : ignores volume versus rate argument
- "Low cost producer wins" this is how the operate because predicting the price of oil is difficult and the forecasts keep under-pricing "why should we invest if it's going to go down to xxx?"
- If the leader of Exxon were to stand up and say "that's it" the ramifications would be huge; perhaps there are being careful?
But there are signs of change: "end of cheap oil"
Industry Outlook
- Exploration is tough -F&D is rising
- Industry is tight: people, services, equipment
-Costs have doubled in the last 3-4 years and are set to double again
-Industry busy fighting declines every day
-[missed this point]
Resource nationalism
Not limited to Middle East: Scotland, Alberta, Venezuela are doing it too "this is our oil" or windfall taxes
NOCs produce oil x3 more expensively than IOCs, on average
Summary
-World produces 30+ bn bbls per year; replaces <10
-World's reserves dominated by large fields
-Signs of decline in the biggest fields
-Alternatives can't offset decline rate
-Nationalism reduces access for IOCs, reduces efficiency
-Demand is still increasing (for non-OECD)
....price of oil is going up.
During Q&A
The statement "the stone age didn't end because we ran out of stone" is the most vapid, brain dead statement perhaps ever said.
"....59-66% EURR. isn't that contrary to simmon's 35 - 40 % ?
Matt said that he had doubts that--when all energy inputs are accounted for--the Barnett Shale is energy positive.
And he said that Faith was "tearing his hair out" trying to find any good news regarding global oil supplies.
I guess we'll see in the coming months whether we can rename him Faith or not. The report coming out in november will be a major event.
Thanks for catching those.
The other thing he noted was that "Barnett was the best one."
The "Generals" cannot be shorted
I guess what is good for General Motors may not be good for the US.
Goes for General Electric also.