Daily Digest

Daily Digest 2/18 - The Budget For Dummies, Unrest in Bahrain, No Net Energy in Colorado Shale Oil

Friday, February 18, 2011, 11:51 AM
  • The Budget For Dummies
  • America's Budget: The Latest Cop-Out
  • House Spending Impasse Raises Risk of Shutdown
  • Fandango Thursday - Does Anything Really Matter?
  • Bahrain Killings Bring Mid-East Turmoil To Epicentre Of World Oil Supply
  • Colorado Shale Oil Contains No Net Energy
  • Recycled Shopping Bags To Save Suburbs?
  • Chevron: Monster Or Victim?

Follow our steps to prepare for a world after peak oil, such as how to store & filter water

Economy

The Budget For Dummies (jkibbe)

That item -- the total amount the government spends every year -- is by far the most important single number in the budget. The bond investors anxiously monitoring America's fiscal health care little about which categories of spending we raise or lower. What matters to them is the total. And surprisingly, the total is scheduled to rise sharply in the future.

America's Budget: The Latest Cop-Out (jdargis)

Imagine you have developed a serious weight problem. Things have been going badly for you, and as a result you have been piling on the pounds; in the past three years your weight has ballooned by a shocking 10% a year. Your advisers all say that this will give you a heart attack: not immediately, but in the next decade or so. What do you do? Not many doctors would recommend a diet confined to items that make up only an eighth of your consumption (and were in any case often rather good for you), while slyly sticking to a plan to increase gradually the number of cream buns and cheeseburgers you eat every day. Yet that is exactly what Barack Obama has prescribed for the bloated American government.

House Spending Impasse Raises Risk of Shutdown (jdargis)

House Republicans are close to approving a spending bill for the balance of the fiscal year that includes the largest spending cuts in modern history — a swift, huge slash of more than $60 billion from domestic programs and foreign aid that they say would fulfill their campaign promise to shrink government outlays.

The bill, which covers spending through Sept. 30, seemed likely to be approved on Friday.

Fandango Thursday - Does Anything Really Matter? (Ilene)

It was really the same old song and dance: "The pace of the recovery was insufficient to bring about a significant improvement in labor market conditions, and measures of underlying inflation had trended downward... the Committee reiterated its expectation that economic conditions were likely to warrant exceptionally low levels for the federal funds rate for an extended period..."

Bahrain Killings Bring Mid-East Turmoil To Epicentre Of World Oil Supply (pinecarr)

Escalating violence in the oil states of the Persian Gulf and North Africa have pushed Brent crude prices to a 30-month high of $104 a barrel, and raised widespread concerns over the stability of global oil supplies for the first time since the Mid-East turmoil began.

Energy

Colorado Shale Oil Contains No Net Energy (Bill S.)

Since I've been crunching numbers recently, looking at the realism of solar powering Denver's cars, for example, and the reality of recycling plastic bags into the oil they came from, I was intrigued by a couple of facts David mentioned in his piece, excerpted here:

Companies for more than century have been trying to figure out how to commercially unlock the oil from the rocks in the American West. It’s a costly process that involves heating up the rocks to more than 700 degree Fahrenheit and extracting the organic kerogen. The current process consumes inordinate amounts of conventional power and already scarce western water supplies.

Recycled Shopping Bags To Save Suburbs?

As noted in CleanTechnica: "What most of us see as the ubiquitous blight of modern convenience consumerism, i.e., littered plastic shopping bags, Japanese inventor Akinori Ito sees as the “fuel of the future”. Like most sensible inventions, Ito’s began with the simple realization that plastic bags are made from oil. Thus, it should be possible, he theorized, to revert these same items back to their original form."

Environment

Chevron: Monster Or Victim? (jdargis)

On February 14th a court in Ecuador walloped Chevron, an oil giant based in California, with a $9.47 billion fine. If upheld, this will be the highest-ever damages award in an environmental case, according to Pablo Fajardo, a lawyer for the plaintiffs. If Chevron does not apologise within 15 days, the fine may be hiked to an incredible $17.2 billion.

Yet Chevron shows no sign of contrition. On the contrary, it is fiercely contesting the verdict and hopes to persuade courts in New York and The Hague that it is the innocent victim of an attempted shakedown based on a spectacular fraud by the plaintiffs’ lawyers and members of the Ecuadorean judiciary.

Article suggestions for the Daily Digest can be sent to [email protected]. 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."

12 Comments

saxplayer00o1's picture
saxplayer00o1
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...

"The Federal Reserve’s total assets rose by $8.73 billion to $2.51 trillion as the central bank bought Treasury securities as part of the second round of its quantitative easing strategy.

Treasuries held by the Fed rose by $23.3 billion to $1.19 trillion as of yesterday, according to a weekly release by the central bank today. The Fed’s holdings of mortgage-backed securities fell by $6.63 billion to $958.4 billion and federal agency debt fell by $259 million to $144.4 billion.

The central bank has purchased $345.4 billion in Treasuries since Nov. 12 under plans to purchase $600 billion of government debt through June and reinvest proceeds from maturing mortgage debt. "

"U.S. Treasury Secretary Timothy Geithner said there was no risk of Treasury auctions failing over the next 10 years if President Barack Obama's proposed budget plan is passed.

The bond market would be encouraged if Congress enacted the $1.1 trillion in deficit reductions the administration proposed earlier this week, Geithner said in response to a question from Sen. John Thune (R-S.D.).

"If Congress were to enact this level of deficit reduction, you would see a dramatic improvement in investor confidence about the political will in Washington to deal with these problems," Geithner said at a Senate Budget Committee hearing.

Thune remained skeptical over how the market would react if gross federal debt grows to $26 trillion, as allowed under the president's budget.

"I have a hard time understanding how that would be interpreted by the bond markets to be a positive thing," he said."

...........................2A) Geithner warns of market risk on debt limit fight

"But Medicaid makes a particularly fat target. States estimate that the program will cost them $195 billion in 2012, according to projections that they gave the federal government in November. That's up 48 percent from what they spent in 2010 budgets.

The states face a double-pronged problem.

Four years of recession have shrunk state budgets and added to the Medicaid rolls. More people are unemployed and lacking health insurance, and need to rely on the government's insurance program for the poor.

For the past several years, though, states have had some extra help in dealing with the Medicaid influx. State and federal governments split the tab for Medicaid, and in 2009, as part of the stimulus bill, the federal government increased its share of Medicaid spending. But that federal help expires in July, and states are scrambling to make up the difference."

  • Other news, headlines and opinion:

 

Spain bank bad debts at 15-year high: central bank

Obama proposes travel tax for Canadians

ECB emergency lending jump persists and Emergency ECB lending sees sudden surprise jump to 15 billion euros

German Bank Ratings Cut by Moody's on Rule Change

Raise the debt limit -- or cut $738 billion

Perdue unveils budget; 10000 state positions cut (N.C)

San Jose Mayor Delivers Grim State Of The City Address

Saudi Arabia May Risk Shiite Unrest After Turmoil in Bahrain

US Apartment Construction Climbs as More Renters Crimp Supply

Hamtramck seeks $2.5M emergency loan from state

24 percent jump in Mendocino County pension costs

Schools say proposed cuts devastating (Michigan)

G-20 Stung by Faster Inflation Amid Imbalance Dispute

Fed's Evans Says `Disappointing' Recovery Warrants Current Stimulus Steps

Public Worker Protests Spread From Wisconsin to Ohio

Household debt surpasses six-figure mark (Canada)

 

Silver prices:

silver

Quercus bicolor's picture
Quercus bicolor
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Re: Daily Digest 2/18 - Colorado Oil Shale

 Why do they plan to use electricity to heat the shale?  This seems inefficient since electricity production only returns about 30-40% of the energy in the fuel used to generate it.  Why not just use the coal directly to heat the shale or use the waste heat from coal plants to heat the shale.  If this is done, our 6:1 return is accurate.  Of course, there are other energy uses that may be significant including mining the rock and disposing of waste rock.

Steve

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saxplayer00o1
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...

Look at the very strong correlation between the value of the Canadian dollar relative to the U.S. dollar and the major U.S. market indices. Looks to me that the market rally is just reflecting the decrease in the value of the U.S. dollar relative the currencies of our major trading partners. The rallies have nothing to do with an economic recovery in the U.S. It's pure inflation.

 On the other hand, looking at the S&P500 index, it is up about 26% since the beginning of September, while the Canadian dollar is up only 8.6% during that time, roughly a 3x multiplier. I'm not sure where that leverage is coming from.

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songbird
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...

Can someone please explain oil prices for me?  The article about tensions in the MIddle East states that Brent crude had gone up to 104 a barrel, yet on the stock exchange today oil was in the mid 80s.  Is this a different type of oil, or oil for delivery at some future date?  Thanks.

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rhare
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...
songbird wrote:

Can someone please explain oil prices for me?  The article about tensions in the MIddle East states that Brent crude had gone up to 104 a barrel, yet on the stock exchange today oil was in the mid 80s.  Is this a different type of oil, or oil for delivery at some future date? 

This article covers it: http://www.theabsurdreport.com/2011/why-crude-oil-prices-are-now-above-100barrel-by-jim-bianco/

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FED warns of farmland price bubble

Just when you thought it was safe to "buy the farm"!

http://www.tulsaworld.com/business/article.aspx?subjectid=32&articleid=20110218_32_E3_ULNSob317835

Hoenig, whose Fed district includes northeastern Oklahoma, spoke after the Chicago Federal Reserve issued a report Thursday showing that Midwest farmland values were up 12 percent in the fourth quarter compared with a year earlier. He added that the Kansas City Fed has recorded cropland prices nearly 20 percent above year-earlier levels in Kansas and Nebraska. 

Read more from this Tulsa World article at http://www.tulsaworld.com/business/article.aspx?subjectid=32&articleid=20110218_32_E3_ULNSob317835

 

 

dps's picture
dps
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...

Apparently, a few people have realized farm land might be valuable moving forward.  Keeping "true prosperity" in mind may bring thinking different from "bubble."  ... dons

plato1965's picture
plato1965
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...

 

 Farmland is a bubble.. ? Probably.

 1) you can't eat food..

 2) the bernank is rumoured to have a magical land press.

 3) Food is overrated.. a barbarous relic, a passing fad. Farmville is the future !

 What's for tea honey ?

 mm... pixels - my favourite !

 

SagerXX's picture
SagerXX
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Re: Daily Digest 2/18 - The Budget For Dummies, Unrest in ...
plato1965 wrote:

 Farmland is a bubble.. ? Probably.

 1) you can't eat food..

 2) the bernank is rumoured to have a magical land press.

 3) Food is overrated.. a barbarous relic, a passing fad. Farmville is the future !

Oh man (or woman!), Plato -- thank you for the best belly-laugh I've had in a while.  "You can't eat food", indeed....Laughing

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Nate
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Re: Daily Digest 2/18 - Colorado Oil Shale

A colleague that has been described as a world class expert in thermodynamics has taken a position with a start-up company in Colorado to work on oil shale.  Before he left, I asked him about EROEI.  He said using the in situ method and using a portion of the oil shale to heat and extract the unburned oil shale, the EROEI is 3.3 to 1.  He sited a journal article and mentioned this number included everything - including roads and delivery to a refinery.

That being said, energy is still required to convert this to fuel and transport it to you and me.  I have also read that to run a society like ours (USA), it takes a return of 10 to 1. 

Back to fixing my wood burning stove.

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