Daily Digest

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Daily Digest 12/20 - Algae To Crude Oil, Why Do So Many People Hate QE?

Friday, December 20, 2013, 11:56 AM

Economy

Why Do So Many People Hate QE? (Doug A.)

Wrongly Positioned: Equities: A huge swath of market participants have not been properly positioned to profit from market upside. Hence, the relentless bubble talk, crash warnings, end of days chatter. You should have no doubt that this rally will end someday. In the meantime, find a better source of criticism than the sour grapes of those folks who missed most of a generational 170 percent (and counting) U.S. equity rally.

CBO on SS - Another 29' Crash? (Doug A.)

In 2012 a 'fix' for SS would have required an immediate and permanent tax increase of 1.95%. A year later the cost of the fix has risen to 3.36%. That's a 70% deterioration in twelve months. To right the SS ship a payroll tax increase equal to $180B would be required for 2014, and that higher tax rate would have to be sustained forever. A tax increase of this magnitude would sink the economy into a recession that the country would struggle to get out of.

Billionaire Eric Sprott: “You Have To Be A Buyer When People Are Non-Believers” (westcoastjan)

Reflecting on the level of participation he sees coming from institutional investors in this market, Eric said, “There’s no interest. Maybe 2%-3% will listen and maybe 5% of those will act. So it’s a very, very, very small world these days of people who are interested in gold…it’s almost like you have the plague when you’re talking about gold, even though of course over the last 13 years it has been an awesome investment. It just hasn’t been in the last two.”

"Pot Calling The Kettle Black" Classic: Fed Researchers Slam Dishonest Economists (HughK)

The authors – Christopher Foote, Kristopher Gerardi and Paul Willen – argue that the financial crisis was caused by over-optimistic expectations for house prices, while other factors such as distorted incentives for bankers played only minor roles or no roles at all. In other words, it was a bubble just like the Dutch tulip mania of the 1630s or South Sea bubble of the early 1700s, and had nothing to do with modern financial practices.

Then the authors make absolutely sure of their work being well-received by those who matter. The financial crisis is surely a touchy subject at the Fed, where the biggest PR challenge is “bubble blowing” criticism from those of us who aren’t on the payroll (directly or indirectly). But Foote, Gerardi and Willen are, of course, on the payroll. They tell us there’s little else that can be said about the origins of the crisis, because any “honest economist” will admit to not understanding bubbles.

Do Gold and Silver investors want Gold at $5,000 or $10,000 ? Be careful what you wish for. (Part One) (resilientman)

For gold to be at $5,000 (in the next five years) we must either be close to world war III or there must be multiple currency crisis. A single currency crisis will not bring gold to $5,000. If the Euro where to collapse, Gold will not go to $5,000. In that case the dollar, they Yen, the Kroner and the Swiss Franc would go up. However if there was a sudden loss of trust in the major currencies investors would turn to assets like Bitcoin, Gold, Silver, Art, Farmland etc. Some will prefer only Gold , only Silver, or a portfolio of e-currencies such as Bitcoin. Others will invested in a mix.

Northern Gateway pipeline approved by panel with 209 conditions (westcoastjan)

The long-awaited approval includes 209 environmental, financial and technical conditions. Enbridge must set aside $950-million in liability coverage to cover costs of a potential spill, including at least $100-million available within 10 days in the event of a large rupture and $250-million of “no-fault” insurance, the panel said.

Desperate to Boost Oil Production, Venezuela Moves to Devalue Currency (James B.)

On December 16, 2013, Venezuelan President Nicolas Maduro outlined plans to use a weaker exchange rate in order to lift the prospects of its ailing oil sector and deal with a worsening economic crisis. Venezuela’s foreign exchange reserves have depleted to their lowest levels since 2004. The weaker exchange rate allows the government to earn more Bolivars for every barrel of oil sold, which is priced in dollars on the international market. Desperate to Boost Oil Production, Venezuela Moves to Devalue Currency

Algae to crude oil: Million-year natural process takes minutes in the lab (Wendy SD)

In the PNNL process, a slurry of wet algae is pumped into the front end of a chemical reactor. Once the system is up and running, out comes crude oil in less than an hour, along with water and a byproduct stream of material containing phosphorus that can be recycled to grow more algae.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/19/13

Provided daily by the Peak Prosperity Gold & Silver Group

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."

8 Comments

saxplayer00o1's picture
saxplayer00o1
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KugsCheese's picture
KugsCheese
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GDP Revised to 4.1% Growth

Wow, great news!   That should take care of the debt ceiling debate since tax revenue should spike up.  Or not...

Thetallestmanonearth's picture
Thetallestmanonearth
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Algae Fuel

I'm curious what the projected EROEI on Algae looks like at a production scale. Nothing I've seen from existing technologies appears to come close to oil, but, in theory if the process can be streamlined it has the potential to be on par with oil if only because refining can be done at the same location that the algae is grown. If the growing, harvesting and refining can be done for greater than 1:1 and built and maintained without input from the current hydrocarbon economy, that would be a very useful tool as we enter a period of contraction in other energy sources.

Jim H's picture
Jim H
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Algae biofuel

I don't know the quantitative answer to your question.. but I do know this;  One of the smartest guys I know, who is the head of research for a sizeable, family office-based hedge fund in NYC, and who travels to energy conferences around the world, told me that he thought from a VC perspective that Algae had the most potential in the biofuel arena.  He went on to say that if you could locate a facility in a desert region, where you had lots of sun and brackish water available not too far below the surface, that you could begin to compete with oil at todays prices.         

cmartenson's picture
cmartenson
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About that Algae...

Thetallestmanonearth wrote:

I'm curious what the projected EROEI on Algae looks like at a production scale. Nothing I've seen from existing technologies appears to come close to oil, but, in theory if the process can be streamlined it has the potential to be on par with oil if only because refining can be done at the same location that the algae is grown. If the growing, harvesting and refining can be done for greater than 1:1 and built and maintained without input from the current hydrocarbon economy, that would be a very useful tool as we enter a period of contraction in other energy sources.

Once again we get a big press splash but when you click the link and watch the video it's a couple of guys in a lab making a beaker at a time for what we can only assume amortizes out to tens of thousands per barrel.

Of course they may well have something promising and I don't want to dismiss that, only the oversight to note that going from lab bench to demonstration scale (at perhaps 10 barrels per day) has a success value of about 50%.  

Likewise going from demonstration to pilot plant at perhaps 1,000 barrels per day has a success rate of 50%.

And then moving from pilot to commercial, operating at 10,000 to 100,000 barrels per day has about a 50% success factor.

0.5 x 0.5 x 0.5 =  0.125  

There's a one in eight chance of this technology working out.

Even if the technical hurdles are overcome, we are all waiting anxiously for the EROEI calculations.  Once both of those are proven out to be workable, then we should invest like mad in building as many of these plants out as we can.

In the meantime, some caution is warranted before placing too much hope on this particular approach.

saxplayer00o1's picture
saxplayer00o1
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TEPCO detects record radiation at Fukushima’s reactor 2, new lea

TEPCO detects record radiation at Fukushima’s reactor 2, new leak suspected

LesPhelps's picture
LesPhelps
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Posts: 263
Algae farming

Perhaps we can find a way to harvest the algae that we already produce.  Due the fertilizer runoff, we already produce enough algae that we frequently can't swim in lakes in my neck of the woods.  Let's talk some students into researching how we can harvest the blue algae that is creating a problem in Wisconsin.

We are doing such a wonderful job sustainably harvesting crops on land that I can't wait to see us start farming the lakes and oceans.  Who needs drinking water!  My automobile is far more important than food water!

Mots's picture
Mots
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Posts: 112
about that algae

CM thanks  much for your comments that add additional, clear headed viewpoints for a tintillating science article about a {breakthrough] in energy production from some guy  with  tons of money and equipment on  a tiny lab bench reactor.
The  main stream media is jam packed with misinformation and misleading "news" yet the alternative media misleads as well. 

The biggest problem in our new information age is how to navigate the ocean of misinformation that inundates us.  TPTB and everyone with a design on our pocketbooks, affections and time take advantage of this problem and manipulate with BS news.   A major reason to come to this blog site is for a bit of respite and  to find out what is real in  a world consisting of mostly smoke and mirrors.  Thus, the more filtering you provide, the more valuable  this blog site becomes.

I think that eventually someone will figure this out and come up with a news site wherein each news story regarding science will be vetted (with  comments) by someone  with  deep  expertise for each specific field, and each news story regarding a country or economic activity will be vetted (with comments) from a person who lives in the country (or  has employment experience in the reported subject area).  

Now that would be worth paying a premium for.

Mots

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