Daily Digest

Daily Digest 3/5 - MF Global 'Not A Boat Accident', Why Gas Prices Are So High, Peak Water

Monday, March 5, 2012, 11:41 AM
  • MF Global: What Happened to the Money - 'This Is Not a Boat Accident'
  • VP Biden Says He Called Jon Corzine For Advice
  • Foreign Investment in Europe Starts Anew
  • Deepwater Oil Drilling Picks Up Again as BP Disaster Fades
  • Legal Strategy Taken by Shell Is Rarely Successful
  • Reasons Why Gasoline Prices are so High
  • Erik Sprott on KWN: $150 Oil
  • Plateau Oil meets 125m Chinese cars
  • Peak Water

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Economy

MF Global: What Happened to the Money - 'This Is Not a Boat Accident' (June C., Davos)

In a cover up like this it is never the initial act, but almost always the subsequent actions to hide the truth, that festers, and can bring down corrupt organizations.

VP Biden Says He Called Jon Corzine For Advice (Davos)

In case anyone missed it, here is a short YouTube of Biden saying that the administration called Jon Corzine of MF Global for advice during the transition right after the crisis began in 2008.

Foreign Investment in Europe Starts Anew (jdargis)

The evidence so far may be more anecdotal than statistical. But despite the lingering debt crisis and an incubating recession in many nations of the European monetary union, many global companies say they are maintaining or even increasing their investments in the euro zone and elsewhere on the Continent.

Energy

Deepwater Oil Drilling Picks Up Again as BP Disaster Fades (jdargis)

After a yearlong drilling moratorium, BP and other oil companies are intensifying their exploration and production in the gulf, which will soon surpass the levels attained before the accident. Drilling in the area is about to be expanded in Mexican and Cuban waters, beyond most American controls, even though any accident would almost inevitably affect the United States shoreline. Oil companies are also moving into new areas off the coast of East Africa and the eastern Mediterranean.

Legal Strategy Taken by Shell Is Rarely Successful (jdargis)

Marvin E. Odum, Shell’s president for the United States, said in an interview that he was “highly confident” that the company’s plan for preventing and responding to an oil spill would survive any legal scrutiny. He said the company had filed the suit in the hopes of speeding up the judicial review of the plan that will come if and when the environmental groups — who have challenged Shell at every step of the process — file suit.

Reasons Why Gasoline Prices are so High (James S.)

Iran wants nuclear power and (probably) the capacity to build a nuclear weapon; the latter is unacceptable to Israel and the US. But there is more to the standoff than this. Iran is a strategic oil and gas exporting country that, for the past 30 years, has escaped integration into the US system of client states; it also occasionally provides assistance to Israel’s enemies. Following the disastrous US invasions and occupations of Iraq and Afghanistan, Iran has emerged as the principal power in the region, capable of further destabilizing either of its war-torn neighbours. And Tehran has led a move to ditch the US dollar as the standard currency of exchange in the global oil market.

Erik Sprott on KWN: $150 Oil (Davos)

A lot of this they’ve covered on KWN this week. The key points I found were oil 6:50–9:40 an under 3 minute listen. World growing in population, car use in China (covered here, not mentioned are the numbers, in 1990 China had 168 miles of highway and 5.5 million cars, in 2011 it had 53,000 miles 200 million vehicles (U.S. has 47,000 miles). Sees $150 oil, not going to be pretty for the economy. China opening more storage depots. No mas on U.S. Treasuries. China buying up oil and copper too.

Plateau Oil meets 125m Chinese cars (pinecarr)

The unpleasant fact we must all face is that the relentless supply crunch - call it `Peak Oil’ if you want, or `Plateau Oil’ - was briefly disguised during the Great Recession and is already back with a vengeance before the West has fully recovered.

The IEA said non-OPEC production stalled in 2010 and 2011. There was no net increase. While there was a boost from Canada’s tar sands, and America’s shale-oil, and Brazil’s offshore rigs, this was offset by the relentless erosion of the North Sea fields and Mexico’s operations, a collapse in the Sudan, and Libya’s woes.

Environment

Peak Water (Davos)

“It should be obvious from simple arithmetic that population growth is on a direct collision course with increasingly scarce resources.” Jeremy Grantham

The notion of peak water probably sounds crazy to most people. The earth is 70% covered by water. The water cycle replenishes water on a continuous basis. The global warming enthusiasts tell us that glaciers are melting and oceans are rising. This should make water more plentiful. But, as they say in the real estate business – Location, Location, Location. Freshwater shortages in the wrong places could have calamitous consequences to those regions, worldwide commodity prices, the economic future of nations with water shortages and possible war.

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

23 Comments

saxplayer00o1's picture
saxplayer00o1
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Davos
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PineCarr

Hello PineCarr:  Your article from Ambrose Evans-Pritchard really nails it.  

I've been doing a lot of research on China and Globalization:

  1. 1990 China had 168 miles of paved highway.
  2. 2011 China had 53,000 miles of paved highway.
  3. 2011 The U.S. has 47,000 miles of paved highway.
  4. With trucks and cars China has 200 million vehicles (that use oil) on their highways as of 2011.
  5. And one more thing: It takes 121,600 gallons of oil to pave 1 mile of road.

Globalization was as great an idea as derivatives & housing.  Giving our good paying jobs to them so C.E.O.s could make 450-650 times more than the average U.S. worker had some nasty remifications:

  1. Ugh, duh, they'd buy honkin SUV's with our wages.
  2. Ugh, duh, they'd need gas for those honkin SUV's.
  3. Ugh, duh, we won't be able to afford gas when supply & demand push it up because---lucky us---we are competing against workers making 3 cents an hour or in some cases 2 bucks a day.

Before we hit Peak Oil, we've hit Peak Stupidiy vis a vis Peak Production.

And on wages....  Funny thing here: C.E.O.s wages are on welded to their corporations stock price NOT the corporations profits.  Cook those books and you can have a measuring contest with Gulfstream V's, yachts and 6 mansions.

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Of course the really, really good news with this is

Of course the really, really good news with this is that we're going to go after shale everything (gas & oil) and use that water that Jim Quinn was talking about above to frac some earthquakes up and polute the world.  And oh, by the way, earthquake insurance on the east coast is cheap, I pay $20 a month and if you don't have it---call FEMA.

Fracking one stinking well takes 400 tanker trucks using 1,000,000 to 8,000,000 gallons of water.  They use fresh water by the way.

When cancer rates of:

  • 1 in 2 men
  • 1 in 3 women

are just not enough, there is GasLand.  And ask the average American Boobaling about gas and they'll dispense some koch-machine soundbite about just how clean it is to burn.  Well yaeh, but before you burn it you do have to get it.  Nothing like a little mass-dumbification from colleges.  I watched my wife graduate with people earning Masters in Homeland Security.  Our estemed colleges have masters for people who want to manage pizza-box-hirees to mollest our kids.

But don't teach kids about the three E's or how psychopathy has become interwoven with our fellow corporate citizens.

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DurangoKid
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CEO's making 450 to 650

CEO's making 450 to 650 times the average worker? Recently we've heard about abolishing the minimum wage. Instead of abolishing the minimum wage, maybe we need to establish a MAXIMUM wage. We could index it to the minimum by some factor, say, ten. If the minimum were set to $10/hr., the max would be $100/hr. Does anybody need more than $200,000/yr. to live comfortably? If the minimum wage were a livable $15/hr., the maximum would be $312,000/yr. Very generous for one person to get by on.

Think of what this would mean. Less social stratification. Less class conflict. Less poverty. Fewer resources squandered. Political power more evenly distributed.

Without the incentive to accumulate vast fortunes, there would be fewer incentives to exploit working people. If the worker's wages drop, so does the boss's. There would be a big incentive to socialize healthcare because among the elites the cost of insurance would now be a noticeable fraction of their income. Other systems like public transit would likewise improve if the elite classes were forced to rely on them. Equality of outcome has many benefits. Equal opportunity or a level playing field doesn't provide them because those with extra resources always have an advantage. If this sounds extreme, just ask yourself what kind of society do we have now and how does it differ from a society we might want?

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rhare
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CEO compensation a side show

Davos wrote:

Globalization was as great an idea as derivatives & housing.  Giving our good paying jobs to them so C.E.O.s could make 450-650 times more than the average U.S. worker had some nasty remifications:

And on wages....  Funny thing here: C.E.O.s wages are on welded to their corporations stock price NOT the corporations profits.  Cook those books and you can have a measuring contest with Gulfstream V's, yachts and 6 mansions.

While I don't disagree that things are incredibly stupid in the corporate governance world, I think focusing on corporate officer pay is just a side show that distracts from the real problems.  The CEOs and their insane compensation while outrageous is just  a drop in the very large bucket.

Looking around (Forbes, Wikipedia,various articles) you will find that the CEOs at the top 500 companies make a combined compensation of $3-$6 billion/year.  If you assume say 10x that for all the excutives at those companies, you are looking at $30-60B.  A mere pittance compared to the trillions in deficit spending of governments.

As I said, I find the compensation of CEOs to be outrageous and stockholders need to take issue with it.  However I believe the inflated CEO compensation is just another symptom of the much larger fiat currency problems we face.  Large corporations and their officers are just in a position to take advantage of the fiat currency flood - and are encouraged by consumers demanding the ever cheaper iPads and "investors" demanding higher returns no matter what the long term costs.

While we complain about the loss of jobs and manufacturing, we in the US have lived well beyond our means for decades.  Was it a good trade off?  As the world faces resource constraints I think we were allowed to have one really giant long lived party and we are going to have a really big hangover, but  we got the party and with resource constraints (particularly peak oil) it's unlikely any one else in the world will get to party as we have collectively in the US.

So which is more outrageous - a highly compensated CEO flying around in a private jet or a hair dresser driving around in a new expensive car and owning 7 houses?  Both have taken advantage of the flood of fiat and are able to live beyond what their production should allow.  

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rhare
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Fix the problem, not another band-aid

DurangoKid wrote:

CEO's making 450 to 650 times the average worker? Recently we've heard about abolishing the minimum wage. Instead of abolishing the minimum wage, maybe we need to establish a MAXIMUM wage. We could index it to the minimum by some factor, say, ten. If the minimum were set to $10/hr., the max would be $100/hr. Does anybody need more than $200,000/yr. to live comfortably? If the minimum wage were a livable $15/hr., the maximum would be $312,000/yr. Very generous for one person to get by on.

How about we fix the problem instead of another band-aid?  A sound currency and/or non FRB would solve or at least go a long way to fixing many of these problems.  If you don't have free money to play with, you get less of the bad behavior.  I can guarantee if coprorations had to rely on actual savings from stockholders there would be a lot less outrageous CEO compensation.

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phecksel
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rhare wrote:How about we fix

rhare wrote:
How about we fix the problem instead of another band-aid?  A sound currency and/or non FRB would solve or at least go a long way to fixing many of these problems.  If you don't have free money to play with, you get less of the bad behavior.  I can guarantee if coprorations had to rely on actual savings from stockholders there would be a lot less outrageous CEO compensation.

Please tell me you're not suggesting letting the free market decide winners and losers?  THE HORRORS

/sarc

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Perhaps

Perhaps a fix would be a system that doesn't put a need or a desire for money above all else?

I'd expect the chances of such, would be that of seeing banksters behind bars. 0

saxplayer00o1's picture
saxplayer00o1
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NYC Pension Costs Rose Fivefold Since 2002, Reform Group Says‎

NYC Pension Costs Rose Fivefold Since 2002, Reform Group Says
 

Corporate tax revenue drops to 1999 levels (Ireland)

Judge clears way for record bankruptcy in Alabama (Jefferson County)

"Venizelos told Reuters in an interview three days before the exchange offer expires, that the terms hammered out last month after months of tortuous negotiations were favorable and Greece would not hesitate to activate laws forcing losses on bond holders who did not willingly sign up.
"Whoever thinks that they will hold out and be paid in full, is mistaken," he said. "We are ready to activate CACs (collective action clause to enforce losses) if needed," he said."

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Couple In Million-Dollar Home 5 Yrs No $ Down, No Payments Made

Wow, why didn't I think of that?!?

A million-dollar mortgage goes unpaid for Years While Couple Fights Foreclosure (March 3, 2012)
"The eviction from their million-dollar home could come at any moment. Keith and Janet Ritter have been bracing for it - and battling against it - almost from the moment they moved into the five-bedroom, 4,900-square-foot manse along the Potomac River in Fort Washington. In five years, they have never made a mortgage payment, a fact that amazes even the most seasoned veterans of the foreclosure crisis. The Ritters have kept the sheriff at bay by repeatedly filing for bankruptcy and by exploiting changes in Maryland’s laws designed to help delinquent homeowners avoid foreclosure."
http://www.washingtonpost.com/local/a-million-dollar-mortgage-goes-unpaid-for-years-while-couple-fights-foreclosure/2012/03/01/gIQAb4DBpR_story.html

Poet

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The end game has not yet been played...

Davos wrote:

Perhaps a fix would be a system that doesn't put a need or a desire for money above all else?

It's not money, but the constant push for "stuff" above non-tangible things.  Money is just a reflection of that desire to have more, and that may simply be human nature.  People have always coveted that which they don't have - aka the grass is always greener ...

Davos wrote:

I'd expect the chances of such, would be that of seeing banksters behind bars. 0

For now I would agree, but we haven't seen the end game yet.  A currency collapse may unleash a bit more anger towards politicians and bankers....

saxplayer00o1's picture
saxplayer00o1
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As gas prices soar, 70 lawmakers push for curbs on speculation

"With gas prices continuing to soar, 70 members of Congress on Monday pushed federal regulators to stop excessive oil speculation.

The House and Senate lawmakers -- all Democrats -- wrote to the Commodity Futures Trading Commission to urge the agency to immediately put in place limits on traders in crude oil markets and take whatever steps necessary to rein in prices at the pump.

"It is one of your primary duties -- indeed, perhaps your most important -- to ensure that the prices Americans pay for gasoline and heating oil are fair, and that the markets in which prices are discovered operate free from fraud, abuse, and manipulation," the lawmakers wrote in a letter organized by Sen. Bernard Sanders (I-Vt.), who has bee outspoken that speculators are driving up the price of gasoline. "

Other unrelated headlines:

Obama: US 'will not hesitate to use force' against Iran

Obama: U.S. Will Always Have Israel's Back
 

UN nuke chief: 'serious concerns' over Iran
 

 

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Davos
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I wouldn't dissagree

rhare wrote:

Davos wrote:

Perhaps a fix would be a system that doesn't put a need or a desire for money above all else?

It's not money, but the constant push for "stuff" above non-tangible things.  Money is just a reflection of that desire to have more, and that may simply be human nature.  People have always coveted that which they don't have - aka the grass is always greener ...

Davos wrote:

I'd expect the chances of such, would be that of seeing banksters behind bars. 0

For now I would agree, but we haven't seen the end game yet.  A currency collapse may unleash a bit more anger towards politicians and bankers....

________________________________________________________

+1

Last night Arthur Robey posted this Max Keiser peice.  What you write sounds like what Anonymous wrote that Stacy and max talk about in that clip Robey put up.

I think we just found out Rahr is with Anonymous ;-)

I like Max & Stacy, she quoted the unhinged version of what I wrote about Davos WEF on the air.  How Maria Bad Voice Roma makes a million a year and Stacy doesn't is beyond me.

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Greek Default

"Whoever thinks that they will hold out and be paid in full, is mistaken," he said. "We are ready to activate CACs (collective action clause to enforce losses) if needed," he said."

Heh. I have long puzzled at who would be so dumb as to lend to these sovereign deadbeats. When push comes to shove (yes, it has finally come to this after two years of drama) of course the politicians/govt will look out for it's own people and stiff the foreign lenders - either through inflation or outright default. The debts will be cleared one way or another - it has been the way for centuries.

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ppanza wrote:.........of

ppanza wrote:
.........of course the politicians/govt will look out for it's own people and stiff the foreign lenders - either through inflation or outright default.

Gotta wonder which "own people" they will to look out for w inflation.

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Denny

True. It will depend on what they believe will enable their re-election to power and graft.

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Dang Davos

I keep seeing the great to have you back comments, but since I've only recently taken the red pill (2 years ago) I never saw you before you left.  Judging by what I've seen so far since you've been "back" I can see why everyone is so excited at your return.  Fracking me up!  Good stuff, please keep it coming!

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TD
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Use your gifting

I've always been frustrated with folks who have a gifting and then one day "retire" and no longer use their talent. Muscicians in particular... what we all lose when they stop. It saddens me greatly to think of all the songs we would have today if John Lennon had not been taken from us.

Davos, you have a gifting.. it reminds me of John the Baptist, shouting the truth out in the wilderness. Don't stop.

TD

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thanks for the kind words

oppmsu wrote:

...Fracking me up! ...

"Fracking me up".  That made me think of this, you've probably seen it.

By the way, Rolling Stone Magazine had a super piece on fracking, I submitted it last night for consideration on the D.D.

& Thanks too TD.

"http://www.youtube.com/watch?v=b2p_Q8m0H-E"

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ppanza
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Re: Spanish Defiance

Si! There you go. An appropptraite show of machismo from the caudillo to rouse the support of the masses! 

The fact is, when people live beyond their means to such an extreme for so long the time always arrives to settle the accounts - either austerity or stiffing the lenders - whichever is more politically expedient.

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Biden vs Quayle

Is there no better confirmation of media bias than Biden versus Quayle?  Quayle was a genius in comparision.

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DurangoKid wrote: CEO's

DurangoKid wrote:

CEO's making 450 to 650 times the average worker? Recently we've heard about abolishing the minimum wage. Instead of abolishing the minimum wage, maybe we need to establish a MAXIMUM wage. We could index it to the minimum by some factor, say, ten. If the minimum were set to $10/hr., the max would be $100/hr. Does anybody need more than $200,000/yr. to live comfortably? If the minimum wage were a livable $15/hr., the maximum would be $312,000/yr. Very generous for one person to get by on.

Think of what this would mean. Less social stratification. Less class conflict. Less poverty. Fewer resources squandered. Political power more evenly distributed.

Without the incentive to accumulate vast fortunes, there would be fewer incentives to exploit working people. If the worker's wages drop, so does the boss's. There would be a big incentive to socialize healthcare because among the elites the cost of insurance would now be a noticeable fraction of their income. Other systems like public transit would likewise improve if the elite classes were forced to rely on them. Equality of outcome has many benefits. Equal opportunity or a level playing field doesn't provide them because those with extra resources always have an advantage. If this sounds extreme, just ask yourself what kind of society do we have now and how does it differ from a society we might want?

How about just ending the FED?  All that CEO pay is for fictional effort.  Effort = Wealth unless the FED is there printing, printing, printing...

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