Daily Digest

Daily Digest - April 29

Thursday, April 29, 2010, 9:49 AM
  • Canada Sounds the Alarm
  • ECB May Have To Turn To 'Nuclear Option' To Prevent Southern European Debt Collapse
  • Scenarios - Options For Greece If It Cannot Pay Its Debts
  • Market Manipulation, Systemic Risk and Fraud, Pure and Simple, And It Continues Today
  • HSBC Chief: London And New York Are 'Yesterday's News' In The New World Of Finance
  • Treasuries - Prices Retreat Before Fed Meeting, 5-Year Sale
  • Why Today's Gold Spike Is Important And Could Mark The Start Of Something Big
  • The Staggering Collapse of Living Standards in the US - 92% of Americans Unhappy with the Economy
  • Monju Reactor Set To Resume Operation May 6 After 15-Year Suspension
  • BP Welcomes Military Help For Larger Gulf Oil Leak
  • Drilling And Spilling For All The Oil That's Left
  • Peak Everything?

Economy

Canada Sounds the Alarm (cmartenson)

Last month the National Energy Board of Canada (NEB) issued a report entitled, “Short-Term Canadian Natural Gas Deliverability 2010-2012” which confirms my prediction about the strong likelihood of a significant and imminent decline in both Canadian natural gas production and natural gas exports to the US. In the 12 page document, the NEB provides three different price scenarios between 2010 and 2012, a high-price, mid-price and a low-price scenario. In each case, Canada’s natural gas deliverability and exports to the US decline.

ECB May Have To Turn To 'Nuclear Option' To Prevent Southern European Debt Collapse (cmartenson)

We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.

The ECB has been side-lined in the Greek crisis so far but do you allow a bond crash in your region if you are the lender-of-last resort? They may have to act as contagion spreads to larger countries such as Italy. We started to see the first glimpse of that today.”

Scenarios - Options For Greece If It Cannot Pay Its Debts (cmartenson)

Financial markets have increased bets Greece will have to restructure its debt or face a default in the medium to longer term to tackle its fiscal problems even if it clinches a planned three-year aid package.

After that time, questions remain over how Greece will tackle its fiscal problems because it is doubtful that any aid package agreed this year would be extended beyond that. Analysts and traders have outlined a range of options for Greece, or any other euro zone country that might face a similar position, if it is unable to make payments on its bonds.

Market Manipulation, Systemic Risk and Fraud, Pure and Simple, And It Continues Today (james_knight_chaucer)

A lack of effective regulatory response and reform to the Enron and Worldcom scandals, facilitated by the inappropriate if not pandering monetary and regulatory policies of the privately owned Federal Reserve Bank, allowed the even larger housing bubble to form, bringing the US financial system, and indeed the global economy, to the brink of calamity.

HSBC Chief: London And New York Are 'Yesterday's News' In The New World Of Finance (joemanc)

In a speech to the American Chamber of Commerce in Hong Kong, Mike Geoghegan, HSBC chief executive, forecast the rapid rise of Hong Kong and Shanghai as financial markets, the soaring influence of emerging market currencies, and the dominance of their economies. "I believe the 2010s will bring about the close of the Western-centric mindset," he said. "We have now reached a point of no return. In a few years time, who'll remember the G7? We'll remember the E7 – China, India, Brazil, Russia, Mexico, Indonesia and Turkey. These are the ones which will matter."

Treasuries - Prices Retreat Before Fed Meeting, 5-Year Sale (Bengt E.)

U.S. government debt prices fell on Wednesday, as traders booked profits in advance of the Treasury's sale of $42 billion in five-year notes and a policy statement from the Federal Reserve.

Higher stock index futures also reduced safety bids for bonds, even though there remained intense nervousness over the economic fallout across Europe in the wake of rating downgrades of Greece and Portugal.

Why Today's Gold Spike Is Important And Could Mark The Start Of Something Big (mhoop)

One session doesn’t make a trend, to be sure, but if the central banks are flooding the world with currency to support a massive bubble in government debt, the possibility of a portfolio shift out of currencies into gold has to be considered. And if this happens, gold (as I’ve said any number of times) has no natural ceiling. What will China do?

The Staggering Collapse of Living Standards in the US - 92% of Americans Unhappy with the Economy (mhoop)

The poll saw an aggravation of conditions in every area of economic life studied the year before. Increasing numbers of people are reporting difficulty receiving or affording medical care (26 percent) or paying their rent or mortgage payments (24 percent). More Americans faced problems with collections and credit agencies (21 percent), or had mortgages, loans or credit card applications denied (19 percent).

Energy

Monju Reactor Set To Resume Operation May 6 After 15-Year Suspension (Samuel A.)

Japan's prototype fast-breeder Monju nuclear reactor will be restarted possibly on May 6 after a 15-year suspension as the governor of its host prefecture accepted the restart plan Wednesday.

However, it is unclear whether the development of a commercial fast breeder reactor will be completed by 2050 as envisaged by the government.

BP Welcomes Military Help For Larger Gulf Oil Leak (Donald S.)

A new oil leak was discovered at the site in the Gulf of Mexico where a drilling rig exploded and sank, and experts now estimate that five times more has been spilling into the water a day than previously believed, the Coast Guard said late Wednesday. However, an official from BP PLC, which leases the rig, said he did not believe the newly discovered leak has increased the amount of oil spilling into the water beyond earlier estimates.



Coast Guard Rear Adm. Mary Landry disagreed with his statement at a news conference and said she was relying on a new estimate from the National Oceanic Atmospheric Administration. She said NOAA experts now estimate that 5,000 barrels a day of oil are spilling into the gulf. Officials had estimated the leak for days at 1,000 barrels a day.

Drilling And Spilling For All The Oil That's Left (cmartenson)

America’s dream of greater energy independence is rapidly turning into an ecological nightmare. Instead of filling empty gas tanks, BP’s Deepwater Horizon well miles offshore is oozing thousands of barrels a day of oil, already covering an area over 1,900 square miles (3,000 square kilometres) in the food-rich waters of the Gulf of Mexico. With no way of shutting off the valve, which is now buried 1,900 metres below the sea, a $2-billion seafood industry is threatened, not to mention the billions more in damage to coastal real estate values and the potential devastation to wetlands and the wildlife they contain if the growing slick washes ashore.

Most forms of unconventional oil and gas (including, by the way, shale gas) are invariably very hard on the environment. Although tar sands production draws most of the world’s criticism, we are quickly discovering that deep-water wells and the pressure surges they engender run the risk of wreaking even greater ecological and environmental devastation.

Peak Everything? (cmartenson)

Economists Lucas Bretschger and Sjak Smulders argue that the decisive question isn't to focus directly on preserving the resources we already have. Instead, they ask: “Is it realistic to predict that knowledge accumulation is so powerful as to outweigh the physical limits of physical capital services and the limited substitution possibilities for natural resources?” In other words, can increasing scientific knowledge and technological innovation overcome any limitations to economic growth posed by the depletion of non-renewable resources?

The debate over peak oil is heavily politicized, so let's set it aside and test the idea of imminent resource peaks and their consequences for economic growth on three other non-renewable resources: lithium, neodymium, and phosphorus.

Please send article submissions to: [email protected]

33 Comments

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Re: Daily Digest - April 29

"April 29 (Bloomberg) -- European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.

With Greece’s budget turmoil infecting markets from Rome to Madrid, economists are urging German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and other officials to come up with unprecedented measures. Other steps could see governments guaranteeing bonds and the ECB abandoning collateral rules or reviving unlimited lending to banks, the economists said."

................1A) Feldstein Says Greece Will Default and Portugal May Be Next

"April 29 (Bloomberg) -- Harvard University Professor Martin Feldstein said Greece will eventually default on its bonds and other euro-area nations may follow, most probably Portugal.

“Greece is going to default despite all the talk, despite the liquidity package,” Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said in an interview with Tom Keene on Bloomberg Radio today.

Greek officials are hammering out the terms of a three-year rescue package with European Union and International Monetary Fund officials that will probably give the country a loan of 45 billion euros ($59 billion) for 2010 alone. Greek bonds have plunged on concern about the country’s ability to pay its debt despite denials from officials that a default is in prospect.

Greece’s fiscal turmoil is now infecting other markets, with Standard & Poor’s this week downgrading Portugal and Spain, as well as Greece. Feldstein said other members of the 16-nation euro area may also default, with Portugal the main candidate."

 

........................1B) Greece's Finance Ministers Are 'Last to Blame'

"April 29 (Bloomberg) -- Two former Greek finance ministers said their governments never meant to deceive investors, as they fielded questions in London on how the nation became the first member of the euro to have its credit rating cut to junk."

"April 29 (Bloomberg) -- Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said sovereign debt from the U.S. to Japan and Greece will lead to higher inflation or government defaults.

Almost $1 trillion of worldwide equity value was erased April 27 on concern that debt will spur defaults and derail the global economy, data compiled by Bloomberg show. German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks fell across Europe in the past week.

“The bond vigilantes are walking out on Greece, Spain, Portugal, the U.K. and Iceland,” Roubini, 52, said yesterday during a panel discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. “Unfortunately in the U.S., the bond-market vigilantes are not walking out.” "

"“Eventually, the fiscal problems of the U.S. will also come to the fore,” he said during the panel discussion. “The risk of something serious happening in the U.S. in the next two or three years is going to be significant” because there’s “no willingness in Washington to do anything” unless forced by the bond markets. "

"April 29 (Bloomberg) -- Investors are abandoning the euro at a rate not seen since the collapse of Lehman Brothers Holdings Inc. as Europe’s worsening fiscal crisis threatens to splinter the 16-nation currency union."

"“Central bankers and institutional investors have spent 10 years pricing out the likelihood of a euro-zone break-up, and now they have to price it in again,” said Emma Lawson, a currency strategist in London at Morgan Stanley. “The euro will no longer have this additional support going forward.”"

"Serious debt problems in Europe are becoming more evident as Greece, Portugal and now Spain hit financial hardship."

"FRANKFURT — Add this to the list of reasons German taxpayers are unhappy about having to lend Greece money to ease its debt crisis: In effect, they already have.

Germany’s financial institutions hold some 28 billion euros, or $37 billion, in Greek bonds, according to estimates by Barclays Capital, extrapolating from International Monetary Fund data.

Germany’s regulators and many of its banks do not disclose precise figures, but an informal survey on Wednesday of the largest banks indicates that about half of that debt — rated as junk by Standard & Poor’s since Tuesday — appears on the balance sheets of institutions that are owned or controlled by the German government."

"April 29 (Bloomberg) -- Since the U.S. recession began in December 2007, Congress has extended the duration of weekly unemployment benefits for the jobless three times. Now, the lawmakers may have reached their limit.

They are quietly drawing the line at 99 weeks of aid, a mark that hundreds of thousands of Americans have already reached. In coming months, the number of those who will receive their final government check is projected to top 1 million.

It’s a deadline that has rarely been mentioned in recent debates over jobless benefits, in which Republicans have delayed aid because of cost concerns. The deadline hasn’t been lost on Teauna Stephney, a 39-year-old single mother from Bothell, Washington, who said she could become homeless once her $407 weekly checks stop in June.

“What are people like me supposed to do?” said Stephney, who said almost two years of benefits haven’t proved long enough for her to find work after she lost her last job in August 2008. Referring to lawmakers, she said, “I would like them to come and talk to me and spend a day in my shoes.”"

"There were fears that Britain could follow Greece into a financial crisis after a global finance chief warned of economic "contagion" spreading across Europe.

The head of the International Monetary Fund urged politicians to finalise a bail-out for the debt-laden Mediterranean country, saying that every day lost in resolving the problems risked spreading the impact "far away".

Dominique Strauss-Kahn's comments came amid more evidence of Europe's mounting fiscal problems after Spain's debt was downgraded - a move recently applied to its under-pressure neighbour Portugal as well as Greece.

On Wednesday, shadow chancellor George Osborne raised the spectre of the crisis affecting the public finances of the UK, which faces dealing with its own £163 billion mountain of public borrowing.

Speaking to the annual conference of the Institute of Directors about the need to deal with the record debt, he said: "If anyone doubts the dangers that face our country if we do not, they should look at what is happening today in Greece and in Portugal.""

"Bankruptcy has never been used widely by municipal authorities so they have few guidelines. But with cities, towns and counties across the US hard hit by the recession, local officials, investors and analysts are questioning whether bankruptcy could become more common.

The debate stretches from city halls to Wall Street, and the Securities Industry and Financial Markets Association (Sifma) will have its own public airing on the topic at a conference today in Manhattan."

(If the above link doesn't work try getting it through this Google news search)

"49 out of 50 U.S. states are still showing less economic activity than a year ago, based on February 2010 coincident economic indicators from the Federal Reserve of Philadelphia. The chart below is organized from top to bottom, from the most growth in economic activity to the largest declines in economic activity."

chart of the day, chart of the da, economic activity for states 2009-2010

 

"Surprisingly, says Mr Skene, surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

“Their buying would appear to be for one of two reasons. Firstly because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation; or secondly because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices.

“Huge economic slack in most developed nations and falling money supplies in the two biggest currency areas indicate that government efforts to inflate will continue to be unsuccessful – so reason number one is bearish for risk assets; number two is catastrophic.”"

"April 29 (Bloomberg) -- Honeybees in the U.S. died at a greater rate from October to April than a year earlier, with more beekeepers attributing the cause to an illness that has devastated hives in recent years, the government said.

Managed colonies lost to all causes reached 33.8 of the total, compared with 29 percent a year earlier and 35.8 percent during the winter of 2007-2008, the U.S. Department of Agriculture said today. About 28 percent of surveyed beekeepers reported losing hives without any evidence of dead bees, a sign of Colony Collapse Disorder, compared with 26 percent the previous year and 32 percent the year before that.

“It’s unsustainable,” said Dennis vanEngelsdorp, a past president of the Apiary Inspectors of America, which helped conduct the USDA survey. “It’s a pretty big loss for beekeepers to absorb, and they can’t keep doing that.”

Colony Collapse Disorder, which has killed billions of bees worldwide since 2006, has no effective antidote, although scientists say viruses may be a primary cause and other stressors may be contributors."

"April 29 (Bloomberg) -- Europe’s banking industry is threatened with a replay of the credit squeeze that sent the region into its worst recession since World War II, UBS AG said.

Banks are unwilling to lend to counterparts they suspect of having loans in Europe’s most indebted nations after Standard & Poor’s this week cut Greece’s credit rating to junk and lowered the grade on Portugal and Spain, according to Brian Kim, a currency strategist at UBS in Stamford, Connecticut. The banks’ reticence matches their caution on lending to rivals that held collateralized debt obligations two years ago, he said.

“Recall how in March and September 2008 interbank lending began to show signs of stress as counterparty risk jumped, with banks unwilling to lend to their peers for fear that counterparties were excessively burdened with illiquid assets such as CDOs,” Kim wrote in a report yesterday. “Replace ‘CDO’ with Greek or Portuguese bonds, and this is the risk that now looms.” "

.......................12A) As Greece falters, fears stretch around world

"April 29 (Bloomberg) -- Decisions by homeowners to walk away from mortgages they can afford are accounting for more defaults, according to Morgan Stanley.

About 12 percent of all mortgage defaults in February were “strategic,” up from about 4 percent in the middle of 2007, New York-based Morgan Stanley analysts led by Vishwanath Tirupattur wrote in a report today.

Borrowers with higher credit scores and larger loans are more likely to stop paying their mortgages even while staying current on other consumer debt of at least $10,000, the analysts wrote, based on analysis of data from Transunion LLC.

Strategic defaults also increase based on how much more borrowers owe in housing debt than their homes are worth, they said. "

  • Other news stories and headlines:

Aflac Has $1.75 Billion of Greek, Portugal Bank Debt

Greek debt crisis: Euro leaders call emergency summit to avert meltdown

Italian and Greek Notes Rally on Auctions, EU Bailout Package

Kids in Argentina learn to grow their own food

State employees, retirees brace for higher health care costs (Texas)

Iran: Unemployed increase as Iran's economy languishes

California's legislative leaders ask feds for billions owed

Pasadena pension debts could be financial "tsunami" for city

Obama taps Yellen as Fed No. 2

Antioch Fourth of July celebration canceled because of budget woes

Special Report: Rapid growth of militias feeds off politics

Thai troops struggle to contain Bangkok protests

CB's picture
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Re: Daily Digest - April 29

I am wondering if the ratings downgrade suffered by Greece was in part intended to force the EU to come up with a unified plan to deal with the crisis, and in part to pump up the US stock market and make it easier to sell US government debt - defining the US as still the haven of last resort. Given that the news item above that the large banks have been driving the market 'recovery' perhaps they hope to off-load their shares to investors panicked by the euro crisis. You can see today that the Dow has already recovered from its 200 point drop...

Given the dire straits the state budgets, likely lay-offs of large numbers of public sector employees, ending of extended unemployment benefits, etc, it would seem that the initial cash infusion has about run it course here - so what is the next play to buy a little more time?

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Re: Daily Digest - April 29

Isn't it N. Dakota that has it's own State Owned and Run bank?  Could there be a correlation?  

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Re: Daily Digest - April 29

ND - small population, energy industry, and military installations. I think they also get more back in federal subsidies than they pay in taxes. I doubt that the bank has much to do with it - not that its a bad idea...

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Re: Daily Digest - April 29
CB wrote:

ND - small population, energy industry, and military installations. I think they also get more back in federal subsidies than they pay in taxes. I doubt that the bank has much to do with it - not that its a bad idea...

ND -  progressive state government that encourages economic diversity, lots of new oil activity, staging and supply to Canadian energy industry, a large labor pool with strong work ethics, strong infrastructure to move goods and energy

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Re: Daily Digest - April 29

Long time lurker, first time posting...  I don't know what it is is, but the whole California spending 800m a year on incarcerating "undocumented" people (read illegals) that they want payback from the federal goverenment really sits poorly with me at the current time, pushing me to finally register and post here...  (From the link above California's legislative leaders ask feds for billions owed)

Everyone and their cousin seem to be all over Arizona for their stance on illegals, but no one has a better solution other than whining.  I'm sure we'd see gang activity, people arrested for marijuana, etc. in the list of incarcerated folks - lots of opportunity for improvements, but no political willpower to do anything positive.  Just posturing.  And wasting money...

The Greece situation is like watching someone pull a bandaid off in utter slow motion.  Everyone knows the outcome will be default, yet still we watch reindeer games being played with Greece and the rest of the the Euro-disaster that IS what the USA is emulating. I can't stomach the lies and intellectual dishonesty anymore!  Arrgh!

Ok, I feel better now.

-SnBiTX

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Re: Daily Digest - April 29 - Gulf Oil Leak and Wind Farms

It's intersting to juxtapose the Gulf oil leak with the news about wind turbines offshore of Massachusetts. I was a bit taken aback by all the opposition to the wind farm. I know it's mostly NIMBYism, but, in the end, your electricity has to come from someplace; are people that disconnected form reality? No energy source is perfectly cheap, safe, and clean; though I'd certainly choose a wind farm  over deep water wells. This debate certainly isn't helped by the news. The Newshour (yes, PBS!) had a  spot with Robert Bryce where he stated that Denmark hadn't reduced CO2 emissions even after installing many wind mills. Of course it's easily debunked, but who is going to fact check the Newshour?

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Re: Daily Digest - April 29

North Dakota ranks 48th in population (followed by Vermont and Wyoming) and ranked 6th in 2005 in subsidies received vs taxes paid ($1.68 for each $1).  Probably irrelevant - yes?

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Re: Daily Digest - April 29
StarsNBarsInTX
First, welcome to the website.  Next, you're right, politicians don't have the stomach to do anything about the illegal alien situations.  That's because two huge and usually opposing political factions don't want anything to be done.  The right wants the cheap labor provided by illegals, and the left doesn't want people being herded across the border and dispossessed of their accumulated wealth like so much chattel or being pulled over because they don't look right, whatever that means.  So, its human rights vs. cheap labor, and both sides want the same thing.
And then, of course, the logistics of the problem are impossible.  What about the kids born here to illegals?  Under the Constitution they're citizens.  And, do we really want productive residents who have settled in, contributed to their communities with work and taxes and are raising families to be deported?  But, if we don't deport them, it sets a bad example for the next crowd that wants to come over.  The message would be, stay here long enough and you'll get your citizenship.
I don't have a lot of sympathy for politicians, but they are faced with impossible choices in this case.
Doug
PS, I don't know what's going on here, but paragraph breaks being done away with.
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Re: Daily Digest - April 29

Arizona is also invested in the 'for profit' prison business - the more beds occupied the more $$ the contractors take home. It wouldn't surprise me if the governor and others want to dip in the same well as California, given the current budget defecit here and lack of reasonable plans to deal with it, and try to extract more dollars from the feds through this means. This would also benefit the prison contractor lobby - a not insignificant force in the state.

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Re: Daily Digest - April 29

Hi Doug - thanks for the welcome!.  Yes, there are lots of troubles and problems that need to be solved, and the politicians don't seem to ever want to really work on hard things, they just want to LOOK like they are working on things.  Sigh.  I'm conflicted on what the best immigration solution would be; I've known of several illegals who truly work harder than most anyone you'll ever meet.  They've been fortunate to work for people who've treated them right (no insurance, but they're paid as much as their American counterparts who also don't have any insurance as laborers).  These are the types of folks we absolutely WANT to be in this country, and I have no issue with giving them amnesty and a fresh (taxable) start.  I've witnessed more Hispanic and Vietnamese first generation Americans who've worked harder than natural born US citizens than you can shake a stick at...

I've also known of some illegals (here in TX) who are essentially wards of the state on medical disbursements.  They've never contributed a thing to the infrastructure, and these are hard to stomach.  We need to cull out the infinte 'benefits' to our own citizenry, not add to it by picking up illegals and adding them to the tab.

In the end, though, as long as we've got career politicians (pick your party), we won't have anyone who'll trully try to address the hard things, be it immigration, deficits, you name it. 

-SnBiTX

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Primer on Immigration: Legal & Illegal

A billionaire who helped straighten out my whacked-out economic "logic" gave me 3 links. CM's site, Al Batlettes site & this immigration site video.

When dealing with immigration it is critical to retain the fact that this is yet one more Congressional (Circa 1960s) scr*w up and that legal immigration has created more of the problem then illegal immigration. Of course, if you haven't watched Dr. Al's "The biggest problem the human race faces is its' inability to comprehend compounding math..." I'd starte there.

 

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Re: Daily Digest - April 29 - Gulf Oil Leak and Wind Farms
SteveS wrote:

It's intersting to juxtapose the Gulf oil leak with the news about wind turbines offshore of Massachusetts. I was a bit taken aback by all the opposition to the wind farm. I know it's mostly NIMBYism, but, in the end, your electricity has to come from someplace; are people that disconnected form reality? No energy source is perfectly cheap, safe, and clean; though I'd certainly choose a wind farm  over deep water wells. This debate certainly isn't helped by the news. The Newshour (yes, PBS!) had a  spot with Robert Bryce where he stated that Denmark hadn't reduced CO2 emissions even after installing many wind mills. Of course it's easily debunked, but who is going to fact check the Newshour?

+1

There has never been a solar spill.

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Re: Daily Digest - April 29

I don't want to throw too big a curve here, but just to toss out something to consider, I'll bring up Jevons' Paradox. The theory goes that as you increase the efficiency of a particular energy technology (e.g. an internal combustion engine, electrical power generation, etc.), you lower the cost of consumption per unit output. As the energy gets cheaper, it is more available and consumption grows out of proportion to efficiency gains. The net effect is that increased efficiency paradoxically leads to greater overall consumption. At least that was Jevons observation when it came to coal and steam engines centuries ago in England.

Applied here, I think it is possible that areas that increase energy supply with renewables might actually demand more energy. The greener people can delude themselves into thinking they are, the more they might feel there is no problem. I think the fundamental root cause of our problems is a cultural issue. I am certainly pro renewables, but only within the context of understanding the constraints we have to work within. Believing that that renewables are going to provide a replacement for cheap oil (or coal, or uranium) is just ridiculous.

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Re: Daily Digest - April 29

Obama pledges to use all resources for spill

WASHINGTON (MarketWatch) -- The U.S. government will use "every single available resource" at its disposal to help contain the spreading Gulf of Mexico oil slick threatening the Louisiana shoreline, President Barack Obama said Thursday.

That could include the military, Obama said, though he stressed that the ultimate clean-up responsibility belongs to BP PLC. The company was leasing the offshore rig to drill a well that blew out, creating the crude-oil spill and the explosion and fire that ultimately led to the sinking of the rig, owned by Transocean Ltd. /quotes/comstock/13*!rig/quotes/nls/rig (RIG 78.16, -6.67, -7.86%)

BP raised its leak estimate to as much as 5,000 barrels of oil a day flowing into the Gulf of Mexico from a wellhead near the sunken oil rig Deepwater Horizon.

Oil was reported on the water over an area of at least 42 miles by 80 miles, about the size of the states of Rhode Island and Delaware combined.

The oil slick is expected to reach the Louisiana shoreline as early as Friday, threatening fishing and tourism in the region. See full story.

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Peak everything

seems to be heavy on "faith", until its real and here, these solutions are only a dream.  Its funny how people seem to confuse faith with some kind of future reality.  Still, there were somegood points, it will be nice for everyone if the battery technologies under development become a reality.

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Re: Daily Digest - April 29

US Bill threat to basic human freedom to grow food

Posted April 29th, 2010 by admin

S 510, the Food Safety Modernization Act of 2010,  may be the most dangerous bill in the history of the US.  It is to our food what the bailout was to our economy, only we can live without money. 

“If accepted [S 510] would preclude the public’s right to grow, own, trade, transport, share, feed and eat each and every food that nature makes.

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Re: Daily Digest - April 29

Speaking of plumes of smoke, of course, calls to mind the third unfolding disaster of the last week, the wreck of the Deepwater Horizon drilling rig, which according to an announcement today is currently spewing around five thousand barrels of oil a day into the Gulf of Mexico. The US Coast Guard has announced that it plans to light the spreading oil slick on fire, in the hope that enough of it will burn up to save the $2 billion a year Louisiana seafood industry from disaster. Partisans of the “drill, baby, drill” approach to energy security take note: there are good practical and economic reasons why most of the US coast has long been off limits to oil drilling, and getting oil out of deposits nearly a mile underwater, and a good deal further than that under sea-bottom sediments, is not as foolproof a procedure as politicians and talk show hosts would like you to think.

These three smoke plumes, interestingly enough, have a factor in common, and it’s the theme I want to discuss in this week’s post – not least because a great many of the crises we’re likely to face as the age of cheap abundant energy comes to an end also share that factor. All three of them resulted when people in a situation of high complexity tried to solve the problems of that situation by adding on an additional layer of complexity.

http://www.energybulletin.net/52634

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Re: Daily Digest - April 29

With all the technology the world has to extract oil one would think there would be enough technology to suck the oil up off the surface of the ocean to recover it. What a terrible waste to burn it not to mention the pollution.

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Re: Daily Digest - April 29
Damnthematrix wrote:

Speaking of plumes of smoke, of course, calls to mind the third unfolding disaster of the last week, the wreck of the Deepwater Horizon drilling rig, which according to an announcement today is currently spewing around five thousand barrels of oil a day into the Gulf of Mexico. The US Coast Guard has announced that it plans to light the spreading oil slick on fire, in the hope that enough of it will burn up to save the $2 billion a year Louisiana seafood industry from disaster. Partisans of the “drill, baby, drill” approach to energy security take note: there are good practical and economic reasons why most of the US coast has long been off limits to oil drilling, and getting oil out of deposits nearly a mile underwater, and a good deal further than that under sea-bottom sediments, is not as foolproof a procedure as politicians and talk show hosts would like you to think.

These three smoke plumes, interestingly enough, have a factor in common, and it’s the theme I want to discuss in this week’s post – not least because a great many of the crises we’re likely to face as the age of cheap abundant energy comes to an end also share that factor. All three of them resulted when people in a situation of high complexity tried to solve the problems of that situation by adding on an additional layer of complexity.

http://www.energybulletin.net/52634

Great read Mike. The article discusses complexity - complex systems and the attempt to apply increasingly complex solutions to problems where simplicity is probably more desirable, but carries short term costs that people or societies would rather not pay - let me add another quote from the article that follows from a discussion of Goldman's role in the crash of '29:

Quote:

One of the many problems set in motion by this strategy was that all the ordinary sources of investment income were reduced to paying chump change. Gone were the halcyon days when every bank in the United States paid 5.25% per annum on savings accounts by federal law. (It somehow seems to have escaped the attention of most economic historians that the end of that era coincided very precisely with the point at which most Americans stopped putting their money into savings accounts.) As the Fed repeatedly bounced interest rates off the floor to jumpstart an increasingly reluctant economy, every person and institution dependent on investment income found themselves facing a sharp decrease in income. The simple solution would have been to accept the austerity that this entailed, but for obvious reasons this was not popular; it’s worth remembering that “simple” is rarely the same thing as “easy.”

The alternative was to respond to this complex set of circumstances by adding another layer of complexity, and Goldman Sachs was ready to help them do so. Complicated, risky investment strategies that promised high returns became the order of the day. In their eagerness to make more than chump change, a great many people thus became chumps.

The situation in Greece, and a great many other southern European countries, was similar. The same habits of economic manipulation that made the US economy so complex over the last two decades were just as popular in Europe, with the added complexity of a single currency far too rigidly structured to deal with the economic vagaries of more than a dozen fractious nation-states with different economic policies. Add in the speculative boom in real estate that went bust in 2008, which flooded southern Europe with money and then took it all back with interest, and you have a very complex situation, one in which all the usual options were foreclosed by EU economic policy. There were several simple solutions, such as ditching the Euro and allowing a new Greek currency to find its market value, but once again, “simple” is not the same thing as “easy.”

The government of Greece responded to these complexities instead by adding another layer of complexity. It hired Goldman Sachs – no, I’m not making this up – to create a set of complicated investment vehicles that made the Greek national debt look smaller than it was, in order to get by the more onerous limits of EU economic policy. These vehicles proceeded to crash and burn in the grand style, and took the Greek economy with them. Similar vehicles were sold by quite a number of brokerages – Goldman Sachs was far from the only player here – to national, provincial, and municipal governments all over Europe, and to state and local governments in the US as well, and yes, they’ve been blowing up right and left; I don’t think vehicles so flammable have been seen in such numbers since the Ford Pinto was recalled.

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Re: Daily Digest - April 29
idoctor wrote:

With all the technology the world has to extract oil one would think there would be enough technology to suck the oil up off the surface of the ocean to recover it. What a terrible waste to burn it not to mention the pollution.

This also occurred to me. A guess at the answer: Such technology is possible, but the cost to private industry is deemed too great to deploy. It would probably require stationing a tanker with the gear installed near each deepwater oilfield - within a day or twos sail. Instead, normal rules of capitalism apply - private industry is not required to pay the true costs of their enterprise. It is left for the public to bear these costs when the inevitable accidents/pollution/health problems occur.

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Re: Daily Digest - April 29

Hi Mike. I have been following this site for almost 2 years but have not posted. I was really alarmed buy your post and I followed your link and then read the first part of the bill. The following is  Section 101  "B" This is where "Farms" are excluded.

‘(B) Such term does not include farms; private residences of individuals; restaurants; other retail food establishments; nonprofit food establishments in which food is prepared for or served directly to the consumer; or fishing vessels (except such vessels engaged in processing as defined in section 123.3(k) of title 21, Code of Federal Regulations, or any successor regulations).

The term "farm" also includes:

‘(III) such an operation that sells food directly to consumers if the annual monetary value of sales of the food products from the farm or by an agent of the farm to consumers exceeds the annual monetary value of sales of the food products to all other buyers;

I did not see where the public would be stopped from growing, sharing or consuming, or sellign its own food to consumers. Could you please tell me where in the bill it says this. I am not a lawyer and following the language is difficult.

Thanks

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Re: Daily Digest - April 29 - Gulf Oil Leak and Wind Farms

Well that probably is inaccurate considering the amount of natural gas that is consumed refining Silicon and the tanker loads of water pollution that is also created from the refinement of Silicon. There is also mining of rare trace elements that are used to dope silicon to create N and P Junctions.

 

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Re: Daily Digest - April 29

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Re: Primer on Immigration: Legal & Illegal
Davos wrote:

A billionaire who helped straighten out my whacked-out economic "logic" gave me 3 links. CM's site, Al Batlettes site & this immigration site video.

When dealing with immigration it is critical to retain the fact that this is yet one more Congressional (Circa 1960s) scr*w up and that legal immigration has created more of the problem then illegal immigration. Of course, if you haven't watched Dr. Al's "The biggest problem the human race faces is its' inability to comprehend compounding math..." I'd starte there.

 

Davos -- Would you please provide a link to Al Batlettes' site?  I drew a blank with Google.

Update: I think you ment to type Al Bartlett (missed the R).  Google has lots to show.  Link below for those insterested.

http://www.google.com/#hl=en&ei=3CvaS4OFMILKMYOk5Xw&sa=X&oi=spell&resnum...

 

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Re: Daily Digest - April 29
Mike Pilat wrote:

Applied here, I think it is possible that areas that increase energy supply with renewables might actually demand more energy. The greener people can delude themselves into thinking they are, the more they might feel there is no problem. I think the fundamental root cause of our problems is a cultural issue. I am certainly pro renewables, but only within the context of understanding the constraints we have to work within. Believing that that renewables are going to provide a replacement for cheap oil (or coal, or uranium) is just ridiculous.

Mike - I don't remember where I read it, but I did read in Germany, where solar panel usage is very high, people think because they went "green", it's ok, they did what they had to do to go green, and now their energy use went up. They didn't bother to live within their solar panel "means". You make a vaild argument!

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Re: Daily Digest - April 29

 

"April 29 (Bloomberg) -- New Jersey property tax bills, the highest in the U.S., may rise an average of $600 to make up for Governor Chris Christie’s proposed cuts in school and municipal aid, the state Senate budget committee chairman said.

Towns and schools may boost taxes as much as 8.2 percent as they seek to replace lost funding, Senator Paul Sarlo, a Democrat from Wood-Ridge, said at a hearing in Trenton today. The average property levy was $7,281 last year, according to state data. "

"April 29 (Bloomberg) -- The U.S. Commerce Department imposed preliminary antidumping duties on $260 million of glossy paper imported from China and Indonesia.

The duties will average 60.27 percent for China and 10.62 percent for Indonesia, the Commerce Department said today in an e-mailed announcement. U.S. Customs will start collecting deposits of those duties on the paper, used in magazine publishing, while the case proceeds to a conclusion this year, the statement said."

"April 29 (Bloomberg) -- Venezuelan President Hugo Chavez tapped $19.6 billion of government development funds last year after oil revenue plunged and drove the OPEC nation into its first recession since 2003, according to the Finance Ministry.

Chavez spent $7.2 billion of a $12 billion fund created with China last year and $12.4 billion from the off-budget development fund known as Fonden, a report on the ministry’s website says. The government issued 37 billion bolivars ($8.6 billion) of local and international debt to compensate for a 67 percent plunge in oil revenue, boosting the country’s overall debt-to-GDP ratio to 17.2 percent from 13.8 percent.

“The savings accumulated between 2005 and 2008 have been declining and a good part of that was spent in 2009,” said Juan Pablo Fuentes, an economist at Moody’s Economic.com in West Chester, Pennsylvania, in a phone interview. “Now the ability to spend dollar savings is even more restricted.” "

"April 29 (Bloomberg) -- Fannie Mae, Freddie Mac and Harvard University are among public and private entities that could be shut out of the $605 trillion privately negotiated derivatives market they use to manage risks under legislation being debated in the U.S. Senate, according to an industry group.

The bill would impose a fiduciary duty on swaps dealers doing business with cities, states, government agencies, pension plans and endowments, applying standards that would require banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. to put the interest of those entities ahead of their own.

“Dealers that would be subject to such a requirement would most likely stop doing business with those entities,” Timothy Ryan, chief executive officer of the Securities Industry and Financial Markets Association, wrote in an April 28 letter to Commodity Futures Trading Commission Chairman Gary Gensler. “The result is that these counterparties would lose access to an important array of risk management tools.” "

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Re: Primer on Immigration: Legal & Illegal
Travlin wrote:
Davos wrote:

A billionaire who helped straighten out my whacked-out economic "logic" gave me 3 links. CM's site, Al Batlettes site & this immigration site video.

When dealing with immigration it is critical to retain the fact that this is yet one more Congressional (Circa 1960s) scr*w up and that legal immigration has created more of the problem then illegal immigration. Of course, if you haven't watched Dr. Al's "The biggest problem the human race faces is its' inability to comprehend compounding math..." I'd starte there.

 

Davos -- Would you please provide a link to Al Batlettes' site?  I drew a blank with Google.

Update: I think you ment to type Al Bartlett (missed the R).  Google has lots to show.  Link below for those insterested.

http://www.google.com/#hl=en&ei=3CvaS4OFMILKMYOk5Xw&sa=X&oi=spell&resnum...

 

Link to His site and his YouTubes I'm a rotten speller, I probably spelled his name wrong. CM met the man.

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Re: Daily Digest - April 29
doorwarrior wrote:

Hi Mike. I have been following this site for almost 2 years but have not posted. I was really alarmed buy your post and I followed your link and then read the first part of the bill. The following is  Section 101  "B" This is where "Farms" are excluded.

‘(B) Such term does not include farms; private residences of individuals; restaurants; other retail food establishments; nonprofit food establishments in which food is prepared for or served directly to the consumer; or fishing vessels (except such vessels engaged in processing as defined in section 123.3(k) of title 21, Code of Federal Regulations, or any successor regulations).

The term "farm" also includes:

‘(III) such an operation that sells food directly to consumers if the annual monetary value of sales of the food products from the farm or by an agent of the farm to consumers exceeds the annual monetary value of sales of the food products to all other buyers;

I did not see where the public would be stopped from growing, sharing or consuming, or sellign its own food to consumers. Could you please tell me where in the bill it says this. I am not a lawyer and following the language is difficult.

Thanks

 

Thank  you for your post.

We should also be aware of Feinstein's amendment to S.510, which would ban the chemical BPA from food containers.  I support that effort 100%.

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Re: Daily Digest - April 29
idoctor wrote:

Another good one from CNBC.  I can't help but think that they are starting a process of "conditioning", telling people what people (like the folks here and on other blogs) have known for a long time.  When of if they start showing this at peak times will be really interesting!!

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Re: Daily Digest - April 29

"As Greece falters, fears stretch around world"

Erm, not in the US they haven't - stocks heading back to year highs. Madness.

DavidC

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Re: Daily Digest - April 29

http://www.bloomberg.com/apps/news?pid=20602099&sid=aKBPkdonLv3U

Spain Pricks Solar Bubble, Loses Investors as Greek Fate Looms

By Ben Sills

April 30 (Bloomberg) -- Spain is lancing an 18 billion-euro ($24 billion) investment bubble in solar energy that has boosted public liabilities, choking off new projects as it works to cut power prices and insulate itself from Greece’s debt crisis.

Industry Minister Miguel Sebastian is negotiating reductions in subsidies for solar plants that would curb energy costs, a ministry spokesman said this week. Grupo T-Solar Global SA, the world’s biggest photovoltaic plant owner, shelved its Spanish stock offering three days ago. Solar Opportunities SL postponed a 130 million-euro deal due to be signed today.

“They’ve put the fear of god into all these investors,” said Paul Turney, chief executive officer of Madrid-based Solar Opportunities. “By the time they’ve finished dithering around, they’ll have hurt their credibility so badly that no one will want to invest.”

Spain is battling on several fronts to revive its economy and convince government bondholders it can avoid getting dragged into a Greek-style debt spiral after Standard & Poor’s cut its credit rating April 28. Solar-plant owners including General Electric Co. earn about 12 times what’s paid for power from fossil fuels. Most of that is a subsidy charged to customers.

Prime Minister Jose Luis Rodriguez Zapatero’s government last cut solar rates in 2008, hitting plants not built at the time. Now it’s weighing reductions for the thousands of installations already making power from the sun, wind and biomass.

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Re: Daily Digest - April 29
Goldman's White House connections raise eyebrows
 
By Greg Gordon | McClatchy Newspapers
21 April 2010
 
WASHINGTON — While Goldman Sachs' lawyers negotiated with the Securities and Exchange Commission over potentially explosive civil fraud charges, Goldman's chief executive visited the White House at least four times.
 
White House logs show that Chief Executive Lloyd Blankfein traveled to Washington for at least two events with President Barack Obama, whose 2008 presidential campaign received $994,795 in donations from Goldman's employees and their relatives. He also met twice with Obama's top economic adviser, Larry Summers.

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