Daily Digest

Daily Digest - Apr 26

Sunday, April 26, 2009, 9:16 AM
  • T - 30 Minutes to Stress Test: Above or Below 3% Tangible Common Equity? (Chart)
  • Stress-Tested Banks May Struggle as Bad Assets Triple
  • Stress Test: Not Very Stressful (Interesting GDP projections)
  • Durable Goods and Global Trade - Going to the Charts…
  • Notice of Financial Default: California Develops a Mortgage Tsunami Patter Reminiscent of the 2007 Subprime Collapse. Alt-A and Option ARMs Unite.
  • Bloomberg: Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak
  • Live Avian Flu Virus Placed in Baxter Vaccine Materials Sent to 18 Countries
  • "The Great Influenza" by John M. Barry
  • GM Employee Stock Fund Dumps All Company Shares
  • New Reality Check

Economy 

 T - 30 Minutes to Stress Test: Above or Below 3% Tangible Common Equity? (Chart)

 Stress-Tested Banks May Struggle as Bad Assets Triple 

The tests on the 19 largest banks are likely to focus in part on loan quality as a measure of health. The lenders, which may need to raise $1 trillion in capital to cushion losses according to an April 23 KBW Inc. report, may have a hard time persuading investors to give them cash.

 “We’re really hesitant to put money into financials,” said Douglas Ciocca, a managing director at Renaissance Financial Corp. in Leawood, Kansas, which has $1.6 billion under management. “The ambiguity is still engulfing the opportunity.”

 Stress Test: Not Very Stressful (Interesting GDP projections) 

One thing struck me right away — unless I am misunderstanding something, this stress test is not very stressful.

 Durable Goods and Global Trade - Going to the Charts… 

Boy, those are some serious binoculars they are using to look for signs. What sign, exactly, is Immelt seeing? Is it his hunch? I prefer to look at the data… let’s go to the charts, but before I do, let me address a couple of points about the charts. First of all, it is true that these charts are HISTORY indicators showing us what has already happened. Still, my point would be that one should not construe a leveling out or a bounce to be a change of trend. Once markets have fallen a large percent, the math is deceiving. For example, when an indicator such as the Baltic Dry Shipping Index falls 90+%, it can then bounce 50% off the bottom and that only recovers 5% of its previous value. Hardly the stuff to get excited over. It’s simple math, please keep it in mind. 

The second thing to keep in mind about these charts is that I can’t always get a common value on the vertical axis as they come from the Fed and they do not present all their data in the same manner, so it’s important to look at that vertical axis. Sometimes you are looking at percent change, sometimes the change in a raw dollar figures. Spend some time with each and don’t move too quickly.

The last thing to keep in mind is that most of these economic charts have experienced parabolic growth. When you look at the raw data, it may appear that a blip is occurring on the top of a chart, but when you look at the rate of change you see a completely different picture. Growth is important, so when you compare year over year figures, seeing the rate of change go negative is telling you about growth or lack thereof.

Durable Goods are a good example of the differences in charts. What are durable goods? Let’s turn to the “Investor’s Dictionary” for help:

“A durable good, or a hard good is an economics term for a good which does not quickly wear out, or more specifically; it yields services or utility over time rather than being completely used up when used once. Most goods are therefore durable goods to a certain degree. Perfectly durable goods never wear out.

Examples of durable goods include: Cars. Appliances, Business Equipment, Electronic Equipment, Home Furnishings & Fixtures, Housewares & Accessories, Photographic Equipment & Supplies, Recreational Goods, Sporting Goods, Toys & Games”

Notice of Financial Default: California Develops a Mortgage Tsunami Patter Reminiscent of the 2007 Subprime Collapse. Alt-A and Option ARMs Unite. 

To put it bluntly, there is major economic distress in the form of further collapsing housing heading down the California highway. You wouldn’t know this by looking at short term evidence. Future indicators are flashing red while many people simply choose to ignore bad news and pretend the bottom is in. They will get a rude awakening in a few months. The California economy is still in tatters with unemployment reaching 11.2% which is the highest in the post-War era. Yet some people think this is reason enough to call a bottom. What many fail to realize is the notice of default surge is starting to look very similar to what occurred in early 2007 when we were still reaching peak home prices. The only difference this time is median prices are down by 50% and there is no buffer anymore. First, let us discuss notice of defaults and foreclosures:

 Bloomberg: Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak  

April 25 (Bloomberg) -- Mexican President Felipe Calderon declared an emergency in his country’s swine flu outbreak, giving him powers to order quarantines and suspend public events. 

Authorities have canceled school at all levels in Mexico City and the state of Mexico until further notice, and the government has shut most public and government activities in the area. The emergency decree, published today in the state gazette, gives the president authority to take more action.

“The federal government under my charge will not hesitate a moment to take all, all the measures necessary to respond with efficiency and opportunity to this respiratory epidemic,” Calderon said today during a speech to inaugurate a hospital in the southern state of Oaxaca.

At least 20 deaths in Mexico from the disease are confirmed, Health Minister Jose Cordova said yesterday. The strain is a variant of H1N1 swine influenza that has also sickened at least eight people in California and Texas. As many as 68 deaths may be attributed to the virus in Mexico, and about 1,000 people in the Mexico City area are showing symptoms of the illness, Cordoba said.

Obama’s Visit

The first case was seen in Mexico on April 13. The outbreak coincided with the President Barack Obama’s trip to Mexico City on April 16. Obama was received at Mexico’s anthropology museum in Mexico City by Felipe Solis, a distinguished archeologist who died the following day from symptoms similar to flu, Reforma newspaper reported. The newspaper didn’t confirm if Solis had swine flu or not.

The Mexican government is distributing breathing masks to curtail the disease’s spread. There is no vaccine against the new strain of swine flu, health authorities said.

Museums, theaters and other venues in the Mexico City area, where large crowds gather, have shut down voluntarily and concerts and other events canceled to help contain the disease. Two professional soccer games will be played tomorrow in different Mexico City stadiums without any fans, El Universal newspaper reported. Catholic masses will be held, the newspaper said, although church officials urged worshipers to wear breath masks and to avoid contact.

Schools will likely remain closed next week, Calderon said in the Oaxaca speech. The decree allows Calderon to regulate transportation, enter any home or building for inspection, order quarantines and assign any task to all federal, state and local authorities as well as health professionals to combat the disease.

“The health of Mexicans is a cause that we’re defending with unity and responsibility,” Calderon said. “I know that although it’s a grave problem, a serious problem, we’re going to overcome it.”

Normal Airport Operations

Mexico City’s international airport, which handles about 70,000 passengers each day, is operating normally, said Victor Mejia, a spokesman. Passengers are given a questionnaire asking if they have flu symptoms and recommending they cancel their trip and see a doctor if they do. The measures are voluntary, Mejia said, and no case of swine flu in airport passengers, workers or visitors has been confirmed.

Authorities throughout Central America have issued alerts to prevent the outbreak from spreading. Guatemala ordered tighter control yesterday of its northern border with Mexico, according to EFE. Gerberth Morales, who’s heading the Guatemala government’s response, said no cases of swine flu have been reported in his country, the Spanish news agency reported.

Brazil is intensifying vigilance in ports, airports and borders to check travelers’ health, luggage, aircrafts and ships in a preventive action against the outbreak in Mexico, the Agency for Sanitary Vigilance said on its Web site.

 Live Avian Flu Virus Placed in Baxter Vaccine Materials Sent to 18 Countries 

"Baxter International Inc. in Austria 'unintentionally contaminated samples with the bird flu virus that were used in laboratories in 3 neighbouring countries, raising concern about the potential spread of the deadly disease'. Austria, Germany, Slowenia and the Czech Republic - these are the countries in which labs were hit with dangerous viruses. Not by bioterrorist commandos, but by Baxter. In other words: One of the major global pharmaceutical players seems to have lost control over a virus which is considered by many virologists to be one of the components leading some day to a new pandemic." 

Or, put another way, Baxter is acting a whole lot like a biological terrorism organization these days, sending deadly viral samples around the world. If you mail an envelope full of anthrax to your Senator, you get arrested as a terrorist. So why is Baxter -- which mailed samples of a far more deadly viral strain to labs around the world -- getting away with saying, essentially, "Oops?"

But there's a bigger question in all this: How could this company have accidentally mixed LIVE avian flu viruses (both H5N1 and H3N2, the human form) in this vaccine material?

Was the viral contamination intentional?

The shocking answer is that this couldn't have been an accident. Why? Because Baxter International adheres to something called BSL3 (Biosafety Level 3) - a set of laboratory safety protocols that prevent the cross-contamination of materials.[enphasis added - mine] T - 30 Minutes to Stress Test: Above or Below 3% Tangible Common Equity? (Chart) Stress-Tested Banks May Struggle as Bad Assets Triple Stress Test: Not Very Stressful (Interesting GDP projections) Durable Goods and Global Trade - Going to the Charts… Notice of Financial Default: California Develops a Mortgage Tsunami Patter Reminiscent of the 2007 Subprime Collapse. Alt-A and Option ARMs Unite. Bloomberg: Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak Live Avian Flu Virus Placed in Baxter Vaccine Materials Sent to 18 Countries "The Great Influenza" by John M. Barry 

"The Great Influenza" by John M. Barry

Page 112: The virus may also adapt indirectly, through an intermediary. Some virologists theorize that pigs provide a perfect “mixing bowl,” because the sialic-acid receptors on their cells can bind to both bird and human viruses. Whenver an avian virus infects swine at the same time that a human virus does, reassortment of the two viuses can ccur. And an entirely new virus can emerge that can effect man. In 1918 vetinarians noted outbreaks of influenza in pigs and other mammals, and pigs today still get influenza from a direct desentant of the 1918 virus. But it is not clear wether pigs caught the disease from man or man vaight it from pgs.We know that the virus he found in swine descended directyl from the 1918 virus, the virus he found in swine descended directly from the 1918 virus, the virus that made all the world a killing zone. It is still unclear whether humans gave the virus to swine, or swine gave it to humans, although the former seems more likely.

Page 446: By then the virus had mutated into mild form, or the swine's immune system had adjusted to it, or both, since the virus alone seemed to cause only mild disease. Shpe did demonstrate that with B. influenzae as a secondary invader it could still be highly lethal. Later he would show that antibodies from hman survivors of the 1918 pandemic protected pigs against this swine influenza.

 GM Employee Stock Fund Dumps All Company Shares

If the people on the inside are dumping…the guillotine has dropped.

New Reality Check

So, just in case you feel a sudden urge to join the permabulls, panicky short-sellers, serial bottom-callers, and greater fool investors who've helped drive the market up 25 percent since it hit oversold extremes in early March (aided, of course, by relentless Washington cheerleading and smoke-and-mirrors earnings announcements), below are (just) three reports that put a slightly different spin on this allegedly bullish new reality.

21 Comments

Davos's picture
Davos
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Re: Daily Digest - Apr 26

 Hello:

Well, after all this preparing for a devalued dollar causing insane prices of food and possible interruptions of supplies if major banks tank I find myself reading the latest news wondering what, if any, impact this swine flu could have on the economy and life in general.

A friend emailed me a Baxter faux pas weeks, maybe months ago. It raised an eyebrow but that was it.

About 3 years ago I read "The Great Influenza" by John M. Barry. An interesting book.

Now I'm wondering if this round of swine flu is going to be a non event, (and I'm NOT downplaying the small number of deaths when I say non event,) or if it is going to be a major interruption to food and other goods or services, or if there is more to this - as in a full blown pandemic.

I'm certainly not a doctor, and for that matter neither was Berry, but I do recall many pages of his book that discussed the swine flu and its relation to the bird flu. I'm really wondering how Baxter managed to screw up so badly and if this is going to be one of those things where Baxter and or the bird flu that is out there but in small numbers becomes the catalyst that causes some insane pandemic when and if it mutates inside the swine flu.

One thing for certain, it feels better to be as prepared as possible. Even if there is no hyperinflation (yeah right) or no bird flu at least we like meat, fresh eggs and fresh veggies.

Take care

 

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eb_riesling
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Re: Daily Digest - Apr 26

Davos,

Once again I must send thanks for all your work.

 

The one thought I will throw out is this.  If you were a world leader and were facing a historic melt down of your currency and financial system wouldn't a world wide pandemic be a sort of reset button.  You would not have to face your constituents and if would allow you to start the growth cycle all over again.

E

 

 

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Davos
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Re: Daily Digest - Apr 26

 Hello Eb:

Chris's work and Al Bartletts work indicate to me that the way we live and our population is all stressing our resources. I could not agree more that this would reset everything, I think it would be what WWII did to the economy in the fourties. I agree with what you say.

Sad "solution". That book was a hard read. On one hand I was dissapointed my grandfather never spoke of those times, on the other I probably know why he didn't.

Take care

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Re: Daily Digest - Apr 26

Bloomberg reported the Baxter fiasco back in Feb 24.  Rest of US media ignored this story.

Baxter Sent Bird Flu Virus to European Labs by Error (Update2)
 

 

By Michelle Fay Cortez and Jason Gale

Feb. 24 (Bloomberg) -- Baxter International Inc. in Austria unintentionally contaminated samples with the bird flu virus that were used in laboratories in three neighboring countries, raising concern about the potential spread of the deadly disease.

The contamination was discovered when ferrets at a laboratory in the Czech Republic died after being inoculated with vaccine made from the samples early this month. The material came from Deerfield, Illinois-based Baxter, which reported the incident to the Austrian Ministry of Health, Sigrid Rosenberger, a ministry spokeswoman, said today in a telephone interview.

“This was infected with a bird flu virus,” Rosenberger said. “There were some people from the company who handled it.”

The material was intended for use in laboratories, and none of the lab workers have fallen ill. The incident is drawing scrutiny over the safety of research using the H5N1 bird flu strain that’s killed more than three-fifths of the people known to have caught the bug worldwide. Some scientists say the 1977 Russian flu, the most recent global outbreak, began when a virus escaped from a laboratory.

The virus material was supposed to contain a seasonal flu virus and was contaminated after “human error,” said Christopher Bona, a spokesman for Baxter, in a telephone interview.

‘Sanitized’

Baxter “moved very quickly to sanitize and protect employees,” Bona said. “Labs have been sanitized, potentially contaminated materials have been destroyed and employees were tested and considered not to be at risk.”

Baxter gained 93 cents, or 1.6 percent, to $58.27 at 4 p.m. in New York Stock Exchange composite trading, and has lost 2.3 percent over the last 12 months.

The Austrian health ministry reported the incident to the European Union and is conducting its own audit, Rosenberger said. In response, Baxter said it has put in place “preventive and corrective” measures that the ministry found satisfactory. The vaccine has been destroyed, according to Rosenberger.

The World Health Organization “is aware of the situation and is consulting with the ministers of health of the countries involved to ensure that all public risks arising from this event have been identified and managed appropriately,” said Gregory Hartl, a spokesman in Geneva.

European Agencies

The European Medicines Agency has no immediate comment, said Monika Benstetter, an agency spokeswoman. The U.S. Centers for Disease Control and Prevention, which distributes seasonal flu viruses to companies for vaccine manufacturing, isn’t investigating or providing consultation, said Tom Skinner, a spokesman for the Atlanta-based agency. The CDC is staying in touch with the European Centre for Disease Prevention and Control regarding the incident, Skinner said.

The H5N1 strain of avian flu has been monitored by health officials around the world for more than a decade for signs it could mutate into a form that is easily spread among humans. Currently, it passes mainly among infected poultry.

A flu pandemic of avian or other origin could kill more than 70 million people worldwide and lead to a “major global recession” costing more than $3 trillion, according to a worst- case scenario outlined by the World Bank in October.

H5N1 has infected at least 408 people in 15 countries since 2003, killing 63 percent of them, according to the Web site of the Geneva-based WHO.

Flu Pandemic

BioTest s.r.o, a Czech biotechnology company, was conducting research for a company called AVIR Green Hills Biotechnology using materials supplied by Baxter. The company was “supposed to get non-infected testing vaccine, which was by mistake of the supplier contaminated with the H5N1 virus,” BioTest said in a statement last week.

AVIR Green Hills monitored its lab workers for signs of illness and got access to Roche Holding AG’s Tamiflu antiviral in case of infections, said Birgit Kofler-Bettschart, a spokeswoman for the closely held, Vienna-based company. AVIR Green Hills sanitized its laboratories, destroyed potentially contaminated samples, and told health officials, she said in an e-mail today.

Three influenza pandemics, including the 1918 Spanish flu that killed more than 50 million people, have occurred since 1900.

Threats

Another three pandemic threats -- situations where a global epidemic is close to occurring -- have occurred. One was the Russian flu of 1977.

The H5N1 virus, “even if it were let out of the lab, would be only lethal for birds in its present state,” said Ilaria Capua, a veterinary virologist, whose laboratory in Padova, Italy, handles some of the avian-flu screening for the World Organization for Animal Health. Capua said she has no knowledge of the situation. “In Europe, we can react fast” to outbreaks of the disease in animals, she said.

Baxter, the world’s largest maker of blood-disease treatments, is one of the companies working on a vaccine to be used in case of a flu pandemic. The European Medicines Agency recommended approval of Baxter’s Celvapan, the first cell culture-based vaccine for bird flu in Europe, in December.

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and things aren't any better downunder..

http://www.news.com.au/adelaidenow/story/0,22606,25390014-2682,00.html

Food bowl on brink of $5bn catastrophe

NIGEL AUSTIN
April 27, 2009 12:01am

THE nation's key food bowl, the Murray Darling Basin, is on the verge of
economic collapse as the value of production this financial year plunges by at
least $5 billion, experts say.

Drought and declining irrigation water have plunged inland Australia's heartland
into crisis with the loss of at least one third of the basin's $15 billion
annual income. Worse is predicted for the coming financial year if the drought
continues.

The demise of the economic powerhouse has pushed towns throughout the basin,
particularly along the River Murray, into a severe downturn and population
decline.

An ABS report last week showed the population throughout the basin is declining,
or static at best, with the District Council of Berri and Barmera suffering the
largest and fastest recent drop in SA with 130 people moving out between 2007
and 2008.

Authorities warn the problem has become the biggest crisis Australian
agriculture has experienced, threatening the nation's food supply.

Murray Darling Association general manager Ray Najar said the basin's plight
will worsen substantially next financial year if the long-running drought
continues and there is no water available for irrigation.

Mr Najar said the $5 billion loss of production is very conservative and the
actual loss may be nearer to $7 billion.

University of Adelaide Professor of Natural Resources Science Wayne Meyer said a
catastrophic loss of permanent crops would occur if there was no irrigation
water in 2009-10.

The Citrus Board of SA and citrus exporter Riversun chairman Peter Walker said
that Prime Minister Kevin Rudd would have to intervene if the drought continues
next year.

He said the frustrating thing was that demand was so strong that Riversun could
export many more oranges if it had enough water to grow them.

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Re: Daily Digest - Apr 26

Financial crisis now a human calamity: IMF, World Bank

http://www.abc.net.au/news/stories/2009/04/27/2553083.htm?section=justin

The global economic crisis is turning into "a human and development calamity," with developing countries being hit increasingly hard, the IMF and World Bank say.

"The global economy has deteriorated dramatically ... Developing countries face especially serious consequences as the financial and economic crisis turns into a human and development calamity," they said in a statement.

The crisis "has already driven more than 50 million people into extreme poverty ... We must alleviate its impact on developing countries and facilitate their contribution to global recovery."

How to help the developing world cope with the worst global slump since the 1930s Great Depression was top of the agenda of the spring meeting of the joint International Monetary Fund and World Bank development committee.

The statement said their member states needed to meet pledges, including commitments to increase resources available for lending made at the London G20 summit, in order the tackle the problem.

"Given the possibility of a slow recovery, we considered the need to deploy additional resources," it said, with the World Bank to examine this issue further.

A World Bank/IMF report warned on Friday that the crisis means up to 90 million more people will remain trapped in extreme poverty this year while the chronically hungry could top one billion.

"No one knows how long this crisis will last," World Bank president Robert Zoellick said at a news conference after the development committee met.

Mr Zoellick warned that it would be extremely difficult to meet the United Nations' Millennium Development Goals to reduce poverty by 2015.

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Re: Daily Digest - Apr 26

The whole 'flu crisis appears to be in at least part being over-hyped, though this is nothing new; the mass media do this all the time. One good example is the MMR Vacceine in the UK (where I am) - a story whch was over-hyped and based on no real facts.

 

The deaths are certianly bad, but there could be all kinds of other explinations so it isn't a good idea to just jump to conclusions, run around like headless chickens and jump when the TV tells you to. I mean how high do you want to jump? 

 

I'd urge caution and carry on as normal for now.

 

ljones

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Food shortages ahead: A short explanation.

Will we be able to make fertilisers when cheap oil and gas is no longer available ?

Ammonia (NH3) is made of Nitrogen, Hydrogen and one other magic ingredient - energy.
In the Haber Process the reaction is exothermic (it produces heat) :

N2 + 3H2 + 450 °C + 200 atmospheres => 2NH3 + 92.22 kJ

but you also have to create the inputs,
because neither is found in pure form in nature.

Hydrogen is currently made from fossil fuels
but it can also be made by electrolysing water,
although that reaction is endothermic (it requires energy) :

2H2O + 571.6 kJ => 2H2 + O2

or 4.4 kiloWatt.hours per litre of water split.
That is, more than six times as much energy is needed to make the Hydrogen as is recovered in the Haber Process.

Nitrogen is obtained by the fractional distillation of liquefied air,
that is, you cool air to -196 °C to liquefy it,
then raise the temperature to -184 °C so that the Nitrogen boils off leaving the Oxygen behind.
For every 1Kg of Ammonia you need to cool 1.1 Kg of air, containing 0.82 Kg of Nitrogen, by about 220 °C.
The resulting Nitrogen has to be purified using hot Copper to remove any traces of Oxygen,
and a dehydration agent like P4O10 to remove water vapour.
(The Copper and the P4O10 requires energy to make .... )
So making Nitrogen takes a lot of energy - I'll spare you the detail.

As you can see, the energy needed to make Hydrogen and pure Nitrogen out of water and air
is way more than the energy given off during the Haber Process,
so Ammonia is an energy intensive product.
This is quite aside from all the energy that gets wasted in the form of heat or cold leaking out of the system,
and friction in the pumps, and resistance is the wiring, and ....

Ammonia itself is not very suitable as a fertiliser,
being a gas that is lighter than air.
Ammonia dissolves in water to produce Ammonium hydroxide,
which is strongly alkaline (caustic), so the plants won't like that for very long.
What we need is a neutral compound, a salt such as Ammonium sulphate or nitrate.
Ammonium nitrate is very soluble in water so gives a fast acting hit of Nitrogen to the plants
(organic farmers don't like these strong hits, but agro-industrialists do)
It is made by reacting Ammonium hydroxide with Nitric Acid :

NH3 + H2O => NH4.OH
NH4.OH + HNO3 = > NH4.NO3 + H2O

But where does the Nitric Acid come from ?
It is commercially prepared by the Ostwald Process using Ammonia and Oxygen :

4NH3 + 5O2 + 1000 °C + Platinum catalyst => 4NO + 6H2O
2NO + O2 => 2NO2
3NO2 + H2O => 2HNO3 + NO

Once again, the high temperature and expensive catalyst indicates that this process is going to use a lot of energy,
partly to rearrange the atoms into new molecules,
and partly as waste heat leaking from the hot reaction.
The acid is very corrosive towards metals (and humans),
so the capital equipment needs to be cleverly designed.

But where does the Oxygen come from ?
Well if you were smart, you could have kept the Oxygen from the electrolysis of water that gave us our Hydrogen.
Or you could have kept the Oxygen from the liquefied air that gave us our Nitrogen.
Or you could heat air (3 parts Nitrogen and 1 part Oxygen by weight) to 500 °C
and then zap it with a high voltage electric arc,
to make the Nitrous Oxide (NO) directly, and skip the first step above.

In effect, Ammonium nitrate is water split into Hydrogen and Oxygen,
with the Hydrogen attached to a Nitrogen,
and the Oxygen attached to another Nitrogen.
(There is actually an extra Oxygen atom in there,
hence Ammonium nitrate is called an oxidising agent).

So all you need to maintain the Nitrogen compounds in the soil into the indefinite future is water, air AND ENERGY.

Of course there is more to fertiliser than just Nitrogen compounds,
there is also Phosphorus, Potassium, Calcium, etc etc.
and they can all be made out of other things so long as you have enough ENERGY.

Its a pity we are running out of cheap energy,
because that means we are running out of cheap fertiliser
and that means we are running out of cheap food,
and all the poor people are going to starve.
Well, actually the poorest are starving already.

Malthus was not wrong when he said that population would outstrip the food supply,
although he made his argument sound as if it was very mathematical,
when if fact he was just estimating (see www.peakoil.org.au/dave.kimble/malthus.htm).
The "Green Revolution" saw the world's population soar on the back of a huge increase
in the use of fossil fuels to make fertiliser, to drive tractors and to pump water.
When Peak Oil kicks in and fossil fuels become much more expensive,
agricultural products will have to cost much more or farmers will rapidly go broke.
Either way, the world's population has overshot its sustainable level
and is certain to collapse well within this century.

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Re: Daily Digest - Apr 26

"Either way, the world's population has overshot its sustainable level
and is certain to collapse well within this century."

 

How about well within the next decade. If this next fininacial crisis is as bad as it looks oil production is going to plunge and then bye bye billions of people.

I expect north america to be mostly okay but overcrowded areas like India will suffer a lot.

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Re: Daily Digest - Apr 26

The Green Revolution and the kinds of fertiliser that you believe is necessary to good agriculture has acutally caused enormous damage to soil.  To see how one New Zealand farmer changed that for thousands of Indian farmers go to:

http://prometheus.co.nz/news/environmental-news/composting-guru/

There is also a documentary film out on the subject of Peter Protor's work in Indai.  The farming principles involved are called biodynamic.  There are a lot of alternative approaches to health as well as agricultue pioneered by the alternative community.  Biodynamics is only one. 

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Re: Daily Digest - Apr 26

"I expect north america to be mostly okay but overcrowded areas like India will suffer a lot."

I disagree....

Indian peasants generally farm sustainably now, they have no choice, they can't afford all the agri-chemicals.  Western farming, on the other hand, is so geared to Fossil Fueled practices that changing over is a very very tall order....  Organic farming is far more labour intensive, meaning a lot of you city folk will have to high tail it out of the cities to hoe the weeds!  Indians are already by and large rural people, and they already live sustainably.  It will be the millions who live in Mumbay that will have problems.

Mike

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Re: Daily Digest - Apr 26
FireJack wrote:

"Either way, the world's population has overshot its sustainable level
and is certain to collapse well within this century."

 

How about well within the next decade. If this next fininacial crisis is as bad as it looks oil production is going to plunge and then bye bye billions of people.

I expect north america to be mostly okay but overcrowded areas like India will suffer a lot.

Albert Bartlet was spot on - human population numbers will reach sustainable levels either through planned reductions or be forced upon us - either way it's going to happen.

I'm not so sure about India coming off second best though. From what I understand, they are food self-sufficient and even export food and many of their their farming practices are still low energy processed although they have embarked upon using fertilizers a lot more in recent years.

New Zealand surprised me - it has issues with water - they are just coming off water restrictions and they are having issues with water treatment plants being stretched to capacity as they have failed to expand to cope with the steady population growth over the years. This is a water rich country, poor planning and poor management must surely to be blame?

Seems everything is going belly-up due to governments failing to understand just what increased population numbers need in terms of support. The failure to quantify exactly what it cost in terms of 'everything' to sustain a human being on this planet is coming back to bite us all. Is there any figure around that shows what it actually cost from cradle to grave to sustain a single human being? I guess, in terms of carbon they displace, in terms of resources/energy they consume etc etc etc?

We really are being forced to look at things inter-connectively (if there is such a word) - Chris is spot on with the 3 E's inter-relationship...

EDIT:

Damnthematrix wrote:

"I expect north america to be mostly okay but overcrowded areas like India will suffer a lot."

I disagree....

Indian peasants generally farm sustainably now, they have no choice, they can't afford all the agri-chemicals.  Western farming, on the other hand, is so geared to Fossil Fueled practices that changing over is a very very tall order....  Organic farming is far more labour intensive, meaning a lot of you city folk will have to high tail it out of the cities to hoe the weeds!  Indians are already by and large rural people, and they already live sustainably.  It will be the millions who live in Mumbay that will have problems.

Mike

+1  I agree

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VeganDB12
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Posts: 742
Re: Daily Digest - Apr 26

I am a doctor but not an infectious disease specialist. It is a pandemic in the making I think, but who knows what the fatality rate will be?  We shall see what happens. Having a little extra food and water and medicines on hand for an emergency is never a bad idea in any event, is it?

 

Hopefully this is just another mild flu bug. We shall see.

Regards and be well to all

Denise

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Stephen Lark
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Posts: 44
Re: Daily Digest - Apr 26

I don't know if this has been posted by someone else before me: TheBurning Platform.com - United States Empire Built on False Prosperity Collapsing

Quote:

I bought my home in 1995. The minor upgrades (finished basement, hardwoods) we’ve made over fourteen years were paid for in cash. The other major expenditures were to replace appliances that broke. When the value of the house miraculously doubled between 2000 and 2005, I opened a home equity line of credit with my Credit Union as an emergency fund. It has not been used to take vacations, buy a new car, or install a $25,000 kitchen. The extreme risk takers bought houses with 105% leverage, lied on their mortgage applications, attempted to flip multiple condos, used the appreciation in their home value to live the lifestyle of Madonna and vacationed on the French Riviera. Now the politicians running our government are using my tax dollars to insure that these extreme risk takers stay in their homes. Rewarding reckless behavior leads to more reckless behavior.

Here in Australia we have this currently going on: Kleenmaid customers walk out of creditors meeting

Quote:

Customer Ian Christesen said he was owed $25,000 after paying in full for Kleenmaid appliances he had never received.

Quote:

Elizabeth Freeman...said she had been left $10,000 out of pocket after sending her new Kleenmaid fridge back to the company for repairs.

Quote:

Kleenmaid customer Margaret Olsen said she felt "dead" when she heard about the company going into administration. She and husband Ken are out of pocket about $11,000. "We've paid for it, why don't we get it? It's like stealing."

And this is before we have had a residential property collapse in Australia. These people have no idea - their sense of entitlement depresses me - we have become a society of spoilt brats raising spoilt brats.

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flatspin
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Re: Daily Digest - Apr 26

 Hi

I'm a US expat now living in NW Thailand in a rural ag-based economy. It would appear that farmers here have largely switched to "green revolution" techniques and are heavily dependent on herbicides etc. There are some significant pockets of organic/sustainable farming (re)appearing however. Even with arable land, a good water supply and cheap labor I can tell you it is becoming increasingly apparent to me that I am still a long way from true sustainability.

BTW thanks for the crash course and a great blog. 

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mutschler
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Posts: 26
Re: Daily Digest - Apr 26

 Albert Bartlet was spot on - human population numbers will reach sustainable levels either through planned reductions or be forced upon us - either way it's going to happen.

 

I completely agree.  Trained as a Biologist, there are carrying capacities of every habitat and since humans have occupied essentially every habitat on earth, we have to realize that when resources are overwhelmed by population, there HAS to be a die off.  

The only sources of human population control are birth control (not available in many countries), famine, disease, or war.  

As tragic as it must be, birth control does not seem likely and that leaves mass deaths by probably first famine that leads to war and war often leads to disease.  Eventually huge die offs will lead to environmental recovery and more stable food supply.

Unfortunately, the stored solar energy from millions of years of solar energy that has been burned off over the past century or so will be gone for good.  Remember that before oil and coal, wood was the major source of energy and whole forests in places such as Cypress were deforested in building huge boats and making charcoal to smelt iron and bronze.

As was so clearly explained above, EVERYTHING our civilization needs now depends upon that stored solar energy of fossil fuels.  Not just fertilizer but the smelting of iron and other building materials use energy.  How will we make all those alternative energy appliances if we cannot make iron, aluminum, glass, copper wires, silicon chips, etc. much less transport or install them?

I'm scared.

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Aaron M
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Posts: 2369
Re: Daily Digest - Apr 26

Mutschler,

This is "grim" good news, but... if there has to be a die off, I'd prefer a disease to a famine.

The irreversible damage to an ecosystem caused by a famine, and the subsequent panic would cause even tighter resources and more conflict.

Think of how hotly contested food would become...

I don't see anything yet to indicate that this will be a "pandemic" of historical proportions, but a proportionally larger population would be proportionally more vulnerable.

Humans have long robbed the ecosystem of the "balance" it needs to self-sustain; pushing plants and animals back into recessed populations, consuming vast quantities of fish and livestock, and generally making a mess.

Can you think of what would happen to the rat population if there was a massive human die-off?
Consequently, the bugs and carrion feeders, the raptors, the scavengers and other predators?

The world could get a lot less civilized...

But hey, isn't that the point of this forum!?

Get involved with your community today, and start thinking about gardening, water, energy and how you're going to keep biped and four-legged predators at bay.

...Might want to wear a mask, though. ;)

Aaron

mutschler's picture
mutschler
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Posts: 26
Re: Daily Digest - Apr 26

 "New Zealand surprised me - it has issues with water - they are just coming off water restrictions and they are having issues with water treatment plants being stretched to capacity as they have failed to expand to cope with the steady population growth over the years. This is a water rich country, poor planning and poor management must surely to be blame?"

 

Just another thought.  I recommend reading the book Collapse by Jared Diamond.  It is not as eloquent as Guns, Germs, and Steel but it clearly describes how civilizations have chosen to either control their populations and their use of limited resources or, more routinely, killed themselves off by abusing their environments, Easter Island is his most clear example of deforestation leading to starvation, not just because they destroyed the soil and watershed but because they used large trees to move the huge statues they built for status to such a degree that they could no longer make boats to trade with or fish with and being Polynesian, that was a large part of their diet.

Dr. Diamond also mentions how Australia is also the world's driest inhabitated continent.  Australians will inevitably have difficulties sustaining themselves on their own due to inconsistent rain fall and destruction of huge areas of previously fertile soils due to salts raising to the surface after improper irrigation methods.  Luckily, they have many natural resources to trade with.

I do not know how valid his work is but it definitely raised many issues that impact world food and water supplies.

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lewislj
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Posts: 1
Re: Daily Digest - Apr 26

Its easy to feel comfortable that countries like India and Africa will fare far worse than developed economies irrespective of what collapse we are meant to have in the future, but I think we need to bear in mind that these countries have had it bad for so long that a bit more or less isn't going to phase them too much. On the contrary we in the West are so used to creature comforts and excess food, we don't know what it is like to go without our Internet connection for 2 hours, so get ready for some real pain folks!

Check this previous summation of the preparedness of the US vs the USSR in years gone by. Its still relevant and has some credible prediction power several years back when the party was still raging.

http://www.energybulletin.net/node/23259

 

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mpelchat
Status: Silver Member (Offline)
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Posts: 214
Re: Daily Digest - Apr 26

Guys have we missed one thing. 

*****April 25 (Bloomberg) -- Mexican President Felipe Calderon declared an emergency in his country’s swine flu outbreak, giving him powers to order quarantines and suspend public events. 

Authorities have canceled school at all levels in Mexico City and the state of Mexico until further notice, and the government has shut most public and government activities in the area. The emergency decree, published today in the state gazette, gives the president authority to take more action.

“The federal government under my charge will not hesitate a moment to take all, all the measures necessary to respond with efficiency and opportunity to this respiratory epidemic,” Calderon said today during a speech to inaugurate a hospital in the southern state of Oaxaca.*****

Unless I am reading this wrong, the Mexican president all but declared martial law.  This is HUGE.  A flu happens and freedom is taken away. 

I have never heard of this happening before, I have heard of quarantines and area's of countries being evacuated to clean up the area but never an entire country being governed this way due to a flu outbreak.

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