Daily Digest

Daily Digest - July 27

Tuesday, July 27, 2010, 9:56 AM
  • Goldman Reveals Where Bailout Cash Went
  • Cities View Homesteads as a Source of Income
  • Has the U.S. Lost its Grip on the Credit-Rating Business?
  • Apartment Rentals Surge in U.S. on Home Foreclosures, Job Gains
  • WikiLeaks: More US Documents Coming On Afghan War
  • Recovery Strains Electricity Grid
  • Exploring Algae as Fuel

Economy

Goldman Reveals Where Bailout Cash Went (Claire H.)

Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia. Asked the significance of the list, Grassley said, "I hope it's as simple as taxpayers deserve to know what happened to their money."

He added, "We thought originally we were bailing out AIG. Then later on ... we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world."

Cities View Homesteads as a Source of Income (Jeff B.)

“There are only so many ball fields a place can build,” Tobias J. Tempelmeyer, the city attorney, said the other day as he stared out at grassy lots, planted with lonely mailboxes, that the city is working to get rid of. “It really hurts having all this stuff off the tax rolls.”

Has the U.S. Lost its Grip on the Credit-Rating Business? (cmartenson)

"The Western rating agencies are politicized and highly ideological and they do not adhere to objective standards," Jianzhong told The Financial Times earlier this month.

Is he right? And does the newly passed Wall Street Reform and Consumer Protection Act correct their flaws, or does it make matters worse? It's a question that affects all investors - even those of us that don't invest in bonds, as we'll soon see.

Apartment Rentals Surge in U.S. on Home Foreclosures, Job Gains (cmartenson)

The number of occupied apartments increased by 215,000 in the 64 largest U.S. markets in the first half of the year, according to MPF Research, almost twice the units added in all of 2009 and the most since the firm began tracking the data in 1992. The vacancy rate declined to 6.6 percent last month from 8.2 percent in December.

WikiLeaks: More US Documents Coming On Afghan War (cmartenson)

The documents cover some known aspects of the troubled nine-year conflict: U.S. special operations forces have targeted militants without trial, Afghans have been killed by accident, and U.S. officials have been infuriated by alleged Pakistani intelligence cooperation with the very insurgent groups bent on killing Americans.

Energy

Recovery Strains Electricity Grid (cmartenson)

A return to levels of demand unseen since early 2008 spells problems for many countries that failed to make adequate preparations for the predictable follow-up to the sharpest decline in energy consumption on record.

Large swathes of the developing world and, more surprisingly, several advanced economies are suffering.

Exploring Algae as Fuel (cmartenson)

Different strains of algae are pitted against one another in survival-of-the-fittest contests in an effort to accelerate the evolution of fast-growing, hardy strains.

The goal is nothing less than to create superalgae, highly efficient at converting sunlight and carbon dioxide into lipids and oils that can be sent to a refinery and made into diesel or jet fuel.

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

27 Comments

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Re: Daily Digest - July 27

"As analysts sift through the wealth of new detail from the tests, they are baffled by the chaotic criteria.

"We have a ludicrous worst-case scenario that Greek house prices fall by 2pc in 2011: when you first read it you think their must be a typo," said David Owen from Jefferies Fixed Income.

Austria's worst-case is a 2.7pc rise in house prices, or zero for Poland, and -2pc for Italy. Mr Owen said these assumptions would be demolished by a serious recession. Yet the tests assume that all eurozone states would contract at the same rate in a downturn. In reality, Club Med states and Ireland would almost certainly fare worse since they are already coping with the triple effects of debt-deleveraging, lost competitiveness, and fiscal tightening. "

"Yet views remain polarized. Alastair Whitfield from RBC said a large number of lenders would have failed if the Tier 1 capital ratio had been raised from 6 to a more credible 7, including Deutsche Post Bank, Monte dei Paschi, Espirito Santo, Piraeus, and Allied Irish.

Credit Suisse said the entire Greek banking system and a string other lenders would have failed if "core" Tier 1 had been used, disallowing hybrid capital."

........................1A) Roubini: EU Stress Tests Criteria Not Realistic

"The pan-European stress tests on the banking sector were not tough enough to reflect future worsening conditions for the continent's economy, Nouriel Roubini, economist and chairman of Roubini Global Economics, told CNBC Monday. "

""The assumptions made about economic growth, about sovereign risk are not realistic enough," said. Roubini, who was dubbed by the media "Dr. Doom" but prefers to be called "Dr. Realist."

Plus, most of the sovereign risk was held in maturity books and the tests did not allow for a default, he added."

"BEIJING—About a fifth of the loans made to China's local governments are at risk of not being fully repaid, according to data collected by China's banking regulator, a person familiar with the situation said Tuesday.

The data, submitted by commercial banks to the China Banking Regulatory Commission, show about 20% of loans to local government financing vehicles weren't backed by sufficient guarantees or cash flow, making them high risk, the person said.

On Monday, the Century Weekly, one of China's most respected business magazines, cited unnamed sources saying that the CBRC last week disclosed during a teleconference with banks that outstanding loans to local governments' financing platforms totaled 7.66 trillion yuan ($1.13 trillion) at the end of June.

According to official estimates, outstanding loans to local-government financing platforms totaled 7.38 trillion yuan at the end of 2009, which represented a 70.4% increase from a year earlier and accounted for 18.5% of outstanding bank lending nationwide.

The report couldn't be independently confirmed. In a note sent in response to questions the CBRC said the loans wouldn't necessarily become bad debts.

Local infrastructure investment was a key platform of China's efforts to stimulate the economy in the wake of the global financial crisis, but many of the projects that city and provincial authorities launched were paid for not by government spending, but by off-budget financing vehicles that borrowed heavily from banks and in capital markets. "

...............2A) China banks face 'serious' default risk: report

"According to the Federal Reserve of St. Louis, the median amount of time someone who's unemployed in 2010 remains unemployed rose to over 25 weeks in June.

For comparison, here's a look at the longest median unemployment times for prior Administrations:

George W. Bush, Jan. '10: under 11 weeks

Bill Clinton, Oct. '94: 10 weeks

George H.W. Bush, Nov. '92: 9.3 weeks

Ronald W. Reagan, May '83: 12.3 weeks

Jimmy Carter, May '77: 7.9 weeks

Gerald Ford, May '75: 9.4 weeks

Richard M. Nixon, May '71: 6.7 weeks

Lyndon B. Johnson, Oct. '67, 4.9 weeks"

................................3A) Average (Mean) Duration of Unemployment (St. Louis Fed graph)

"July 27 (Bloomberg) -- Russia’s worst drought in a decade will probably generate losses for bondholders as food prices rise and the government may be pushed to tap debt markets for funds to support farmers.

High temperatures, which rose to a record 37.4 Celsius (99 Fahrenheit) yesterday in Moscow, have damaged 32 percent of land under cultivation and forced Russia to declare states of emergency in 23 regions. Grain prices may double this year because of the drought, according to the Grain Producers’ Union.

Inflation may quicken to 8.1 percent by the end of December, compared with the government’s annual forecast of less than 6.5 percent, according to Yaroslav Lissovolik, Deutsche Bank AG’s head of research in Moscow. "

"NEW YORK (MarketWatch) -- State budget gaps are now expected to total $83.9 billion for fiscal 2011, with shortfalls anticipated for the next couple of years, according to a study released Tuesday by the National Conference of State Legislatures.

That bleak assessment contains one ray of good news: The total is slightly less than the estimate in March for an $89 billion gap.

The biggest shortfall to make up may be the reduction in federal aid for medical programs. Congress hasn't approved extending this aid after increasing support as part of last year's stimulus package.

Officials in many states told NCSL that revenues have started to improve, or at least the rate of decline has slowed. But they still worry stabilizing revenues won't be enough to replace the loss of federal stimulus funds, and several states project deficits through 2013. "

"Almost half of all states said fiscal 2011 gaps would be 10% or more of their general fund. The largest was Nevada, with its budget deficit amounting to 45% of its general fund, NCSL said.

New Jersey, Arizona, Maine, North Carolina and three others had gaps of at least 20%. "

"July 26 (Bloomberg) -- President Barack Obama is on the verge of creating as much as $300 billion in credit for small businesses as bankers raise doubt about whether there’s demand for new loans and how much will be repaid.

The U.S. Senate may vote this week on a bill to funnel $30 billion of capital to community banks, whose business customers typically are small firms. Banks could leverage the sum to make $300 billion in loans that create jobs, according to a Senate summary. That could more than double the commercial and industrial loans at eligible banks as of the first quarter, according to data compiled by KBW Inc.

Bankers say the problem isn’t scarce credit, it’s lack of demand from creditworthy firms in a weak economy. The result may be more loans given to distressed firms and higher losses. "

"Gov. Paterson is preparing to slash the state's workforce.

Escalating his battle with public employee unions, Paterson said Monday planning for layoffs must begin "immediately" because labor leaders have not agreed to concessions.

"Some unfortunate people who don't deserve it are going to get laid off," Paterson said. "And it burns me to have to say that because I don't think it's fair to them. But it's the only way we're going to be able to balance our budget."

The governor was uncertain how many layoffs would be needed and when they'd start. He said the no-layoff pledge he signed with the unions a year ago was not binding because it presumed the state would get more federal Medicaid funding than it did.

"We lost what may be $1 billion from that source, and everybody is going to have to make a sacrifice," Paterson said.

Union leaders slammed Paterson's remarks as irresponsible and insisted the pledge is binding."

"The housing crisis has proved problematic for many builders who are running out of financing before completing new subdivisions, but one Bakersfield, Calif., developer has taken a novel approach: renting out finished homes to finance the rest of the construction.

Now business is booming at the Silverado Ranch -- the rental business, that is. The subdivision is currently 100 percent rentals.

HousingWatch has written many stories on buying versus renting, but this time it's the sellers that have changed their game."

"Nationally, prices have risen 5.1 percent from their April 2009 bottom. But they remain 29 percent below their July 2006 peak."

"Jack Curtis was driving with his wife to the grocery store recently when the 63-year-old elementary school principal from Morris County announced that they needed to downsize their retirement dreams

Why? Because the state's pension system is so far in arrears that Curtis doesn't think he can't count on it any more.

The reality of New Jersey's pension system crisis is sinking in.

The numbers are mind-numbing. As of June 2009, the state's pension systems faced unfunded liabilities of $45.8 billion. That number assumed an annual 8.25 percent return on investments, an actuarial standard that many experts are now declaring as unrealistic. In the past decade, the pension system averaged 2.56 percent a year, not nearly enough to keep pace with projected costs.

More pessimistic assumptions about rates of return peg the pension system liability as high as $173.9 billion — not to mention some $55 billion in unfunded health care costs.

Experts and officials have begun to say it more clearly: There is no way New Jersey will ever be able to pay for the promises it has made to current and retired workers.

State Treasurer Andrew Sidamon-Eristoff says he will forward a list of recommendations for reforming the pension system to Gov. Chris Christie by the end of this week. Those would include some that are "out of the box," he said.

Sidamon-Eristoff said he would not rule out the possibility that even already retired workers may receive reduced pensions or have to pay more for medical care."

"(Reuters) - Oil giant BP said it plans to offset the entire cost of its Gulf of Mexico oil spill against its tax bill, reducing future contributions to U.S. tax coffers by almost $10 billion.

BP took a pretax provision of $32.2 billion in its accounts for the period, for the cost of capping the well, cleaning up the spill, compensating victims and paying government fines.

However, the net impact on BP's bottom line will only be $22 billion, with the company recording a $10 billion tax credit, most of which will be borne by the U.S. taxpayer, a spokesman said."

  • Other news and headlines:

China to Launch Credit Default Swaps in H2

China overtakes US as Brazil's largest investor

Pentagon can't account for $8.7 billion in Iraqi funds

BP Spill Costs Rile Gulf Towns Shut Out of $20 Billion Fund

BP triples asset disposals target to $30 billion

BP posts record $17.2 bln loss in Q2, taps Dudley as new CEO

Natural Gas Could Lead To New Lebanon-Israel War (NPR)

Europe's population above half a billion

India Increases Rates More Than Economists' Estimates

Huge leap in bankruptcy among women (UK)

MIT-Harvard Study: Foreclosure drops house value by 27%

Retail Vacancy Rate in Springfield and the rest of County Climbs

Silicon Valley jobless tap retirement plans to survive (July 23 article)

Violent Crime Spike Follows Oakland Police Layoffs

Record number in RI receiving Social Security benefits

Gantert: Medicaid paid dead people

Banks Charge States Millions in Debt Binge to Fix Subprime Bust

Pa.: 28 pension plans distressed

Orange County schools looking for tax payers to bail them out ($90 million deficit)

Schwarzenegger threatens to leave office without signing budget

Inmate farmers cut state costs

Economy In Depression (Bahamas)

Dunmore Weighs Financial Options

BP Oil Spill: Clean-Up Crews Can't Find Crude in the Gulf

EU adopts ‘unprecedented’ Iran sanctions

Hotel Defaults More Than Double (California)

Consumer Confidence in U.S. Fell in July to a Five-Month Low

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Re: Daily Digest - July 27

Super algae that creates fuel?

Fools. If this comes about the inadvertant spillage will eventually lead to an uncontrolled super algae. It will only be a matter of time before it is impossible to kill with available herbicides. Then what? We all drown in a solution of bio fuels? The earth burns?

As if the engineered seeds that have cross pollinated to create super weeds and genetically morphed, hazardous life forms did not teach anyone anything.

Playing with life on the genetic scale is going to prove the death of the planet. It's one thing to lose control of a trained monkey, or farm animal. Quite another to lose control of a faulty genetic code.

Has anyone else seen evidence of third generation mutations in mammals after ingesting GMO products? You know the hamsters that grow hair in their mouths and are born sterile?

I can't wait to see what kind of piss we are going to put in our fish bowl next.

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Re: Daily Digest - July 27

 http://www.cnbc.com/id/38427247

 A new Another Recession Due Circa 2012: Jim Rogers  A new recession will be due around 2012 but central banks will not be able to throw cash at it any more, Jim Rogers, chairman of Rogers Holdings, told CNBC Tuesday.

British Pound
Adam Gault | Digital Vision | Getty Images

India's central bank raised its interest rate Tuesday, joining other monetary authorities such as the Canadian and Norwegian central banks in hiking rates to stem inflation.

"We do have inflation in the world… most central banks should resign," Rogers said.

There has always been a recession every four to six years in the US "since the beginning of time," and that would mean another one is due around 2012, according to Rogers, a hedge fund pioneer who started the Quantum Fund with George Soros in 1970.

"When the next one comes the world is going to be in worse shape because the world has shot all its bullets," he said.

"Is Mr. Bernanke going to print more money than he already has? No, the world would run out of trees," Rogers added.

The fact that second-quarter earnings have been better than expected does not necessarily mean that the recovery is stronger than anticipated, he said.

"I'm sure some of it is expectation management… but remember what the comparison is. We are talking about the second quarter of 2009, when we thought the world was coming to an end," Rogers said.

"Worry about next year, don't worry about the second quarter now. That's history," he added.

Rogers reiterated his view that the pan-European stress tests into the health of banks were just public relations and said he still owns the euro

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Genetic Engineering - Unknown, Unintended Consequences

Jager06:

Aye! Just to follow up on your post: Unintended consequences of genetic engineering can have very dangerous repercussions. Back in the 1990s, potentially all plant life on Earth may have been in jeopardy.

"These bacteria would therefore get into the root systems of all terrestrial plants and begin to produce alcohol. The engineered bacterium produces far beyond the required amount of alcohol per gram soil than required to kill any terrestrial plant. This would result in the death of all terrestrial plants, because the parent bacterium has been found in the root systems of all plants where anyone has looked for its presence. This could have been the single most devastating impact on human beings since we would likely have lost corn, wheat, barley, vegetable crops, trees, bushes, etc, conceivably all terrestrial plants."

Read the story here:
http://www.donabee.com/health/klebsiellaplanticola.htm

We already know what Chinese carp, Zebra mussels, cane toads, rabbits, rats, and pigs can do. Don't think it can't happen with genetic engineering. It's the unknown, unintended consequences that are scary.

Poet

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Australian Power News

http://www.businessspectator.com.au/bs.nsf/Article/carbon-trading-tax-McKibbin-T\
reasury-RBA-pd20100723-7LV94?

McKibbin powers up
Robert Gottliebsen
________________________________________

Forget Julia Gillard's carbon announcements today and Tony Abbott's insistence that there will be only be a carbon tax over his dead body, Australia is going to have an effective carbon tax – and a big one – no matter who wins on August
21. That's the message from this week's KGBTV interview with Reserve Bank board member and director of the Australian National University's Centre for Applied Macroeconomic Analysis, Warwick McKibbin. McKibbin and I share the same view that the failure of politicians and make a decision on carbon pricing means that we are not getting the level of investment in base-load power generation that is essential to supply the growth to our major centres of population. (Turnbull trashes the tax, June 17.)

For a long time, I have seen that crisis developing, and have pointed to the brownouts and blackouts we will witness over the next few years if the rate of investment remains inadequate. McKibbin says I am wrong, and the crisis is a decade away. However, the reason behind the difference in our views will not be particularly reassuring. McKibbin
believes that the recent big rises in power bills in most capital cities are only the beginning. According to McKibbin, power bills are going to rise dramatically because we need to fund the back-log in distribution facilities and the increase in renewable energy generation. And, as a result, the power price rises will be so steep that they will reduce consumption and delay the base-load crisis.

McKibbin does not describe the power price rises as a carbon tax, but in effect that's what they are. However, more expensive power bills will not encourage base-load power generation and there will be little compensation for the
population – except perhaps higher interest rates (that's my comment not McKibbin's, who was careful to steer away for banking and interest rates given his position on the Reserve Bank board).

I notice this morning that China is considering carbon pricing in the next five years because they believe it is the only way they can moderate carbon emissions (China to launch carbon trading: report, July 22). McKibbin has a novel solution to the problems of a global carbon tax. If Kevin Rudd had pushed this model at Copenhagen the outcome might have been different.

In essence McKibbin says that the proceeds of a carbon tax should go back to the people and that it is easy to develop a formula that can give a carbon tax rating to other measures taken by countries to reduce carbon. That way we can
have a virtual carbon score that gives credit to direct action as well as carbon taxes.

Meanwhile, if McKibbin is right, and we are indeed headed for power charge increases that change the consumption of energy in Australia, then we are facing an enormous change both the industrial and consumer fabric of our society. Our
households are organised on the basis that power is an essential item. With a vast number if houses and offices in hot or cold parts of Australia so reliant on air conditioning, the impacts will be considerable. Meanwhile who could believe the following exchange from the interview? Bartholomeusz: "But at the moment neither side of politics is advocating any kind of carbon price anytime soon, Warwick?"

McKibbin: "Well, the irony in all this is that the Greens probably have closest to the best policy on climate change. It's nowhere near as good as what I want, but it's better than the other two parties. And when you're in a situation where
the Greens are actually winning the policy debate then you know there's something wrong with the policies of the major two parties and I think they've both completely gone off the tracks".

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Re: Daily Digest - July 27

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Re: Daily Digest - July 27
Jager06 wrote:

Super algae that creates fuel?

Fools. If this comes about the inadvertant spillage will eventually lead to an uncontrolled super algae. It will only be a matter of time before it is impossible to kill with available herbicides. Then what? We all drown in a solution of bio fuels? The earth burns?

As if the engineered seeds that have cross pollinated to create super weeds and genetically morphed, hazardous life forms did not teach anyone anything.

Playing with life on the genetic scale is going to prove the death of the planet. It's one thing to lose control of a trained monkey, or farm animal. Quite another to lose control of a faulty genetic code.

Has anyone else seen evidence of third generation mutations in mammals after ingesting GMO products? You know the hamsters that grow hair in their mouths and are born sterile?

I can't wait to see what kind of piss we are going to put in our fish bowl next.

I honestly thought this was tongue in cheek.  At any rate, these kinds of fears seem a bit overblown in this particular instance (although Cat's Cradle was a favorite of mine).  What interests me is the evidence of Peak Oil that abounds without comment from the MSM.  BP funding offshore wind platforms (hat tip Damn the Matrix, comment #22 to yesterday's DD).  Exxon funding alegea growth.  These facts go reported without reflection.  I guess I just continually forget how radical reality really is.

 

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Re: Australian Power News

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Re: Daily Digest - July 27

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Re: Daily Digest - July 27

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Re: Australian Power News
V wrote:

 This is a scam being perpetrated on people the world over to extract every last penny Wall Street and its affiliates can squeeze out of us. And dolts like McKibben are either complicit or out of their minds.

It's quite possible for real natural disasters to be exploited by financial elites for their own benefit. In fact it happens all the time; that's a textbook play of disaster capitalism. I'm not sure about the wisdom of a carbon tax and I wouldn't be surprised if it's used as a tool to concentrate more wealth at the top, but to sugget that free market forces will solve the climate change problem is pretty ridiculous. As you suggested, peak oil is really the only thing standing between the planet and our complete destruction of its ecosystems.

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Re: Australian Power News

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Re: Australian Power News
ashvinp wrote:

I'm not sure about the wisdom of a carbon tax and I wouldn't be surprised if it's used as a tool to concentrate more wealth at the top

Really.... how so?  Since when have banks raised taxes?

And V, if you don't believe taxes go "back to the people", exactly where do you believe they go...?

Mike

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Re: Australian Power News
Damnthematrix wrote:
ashvinp wrote:

I'm not sure about the wisdom of a carbon tax and I wouldn't be surprised if it's used as a tool to concentrate more wealth at the top

Really.... how so?  Since when have banks raised taxes?

And V, if you don't believe taxes go "back to the people", exactly where do you believe they go...?

Mike

Perhaps it will be structured in a way that unfairly burdens small-medium businesses, while major corporations will find ways to avoid it. The wealthy are notorios for gaming the tax codes at the expense of taxpayers. Or with regards to cap and trade, maybe Goldman Sachs will add the sale of collateralized carbon tax obligations (CTOs) to its shadown banking functions and continue skimming money off the top. Seriously though I'm not really familiar with the details of various proposed methods of taxing carbon emissions, but maybe we should tax oil directly to raise the price and discourage consumption? I definitely think many things can and should be done to address the imminent problems of climate change.

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Re: Australian Power News

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Re: Daily Digest - July 27

 

Niall Ferguson: There is a fundamental imbalance between what we expect the federal government to spend on Medicare and Social Security and national security and what we're prepared to pay in taxation. And that is really the core of the issue. The Greeks found that out this year. My fear is that Americans may find this out next year or the year after.

http://marketplace.publicradio.org/display/web/2010/07/27/pm-us-debt-not-sustainable/

 

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Re: Daily Digest - July 27

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Re: Daily Digest - July 27

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Nudge nudge ...


The Controversial Topics forum area is a place where veteran PeakProsperity.com users can discuss topics which are outside of the main thrust of the site, and which, in our opinion, are controversial and/or might deflect a new visitor from understanding the central message of the website. 

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Re: Australian Power News

DTM

Somewhere around 25% goes to interest on the debt (thanks to the bailouts billions went to financial institutions around the world perhaps a bank near you).  A fair portion goes to entitlement programs like Social Security( which actually this year will be in the red. An extremely large portion goes to the military industrial complex yup ya got me there Mike that pretty much goes to the people in the form of Cruise missiles and other explosives. The people though happen to be Iraqis and Afghanis.

A pretty good portion goes to corporations like Monsanto and other agribusiness interests. Pharmaceuticals get a pretty good chunk. A large bureaucracy consumes a large portion in wages and benefits. Are you getting a sense of what I waas saying or do we need to go into more detail?

V

PS Thank god for the black budget of the intelligence agencies and the Pentagon. They get their money from drug dealing.

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Re: Australian Power News

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Re: Daily Digest - July 27

What interests me is the evidence of Peak Oil that abounds without comment from the MSM.  BP funding offshore wind platforms (hat tip Damn the Matrix, comment #22 to yesterday's DD).  Exxon funding alegea growth.  These facts go reported without reflection.  I guess I just continually forget how radical reality really is.

Dave, how much of this is peak oil, and how much is subsidy-farming? If Exxon can get 1.5x return on investments pumping hydro-carbons or get 2.0x return on hiring bio-geeks to grow green sludge in test-tubes, they will at least investigate the sludge-growing business. Obviously, it also is a PR-boon, so it won't even have to be a bigger return for it to be viable.

-S

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Re: Nudge nudge ...
dave s wrote:


The Controversial Topics forum area is a place where veteran PeakProsperity.com users can discuss topics which are outside of the main thrust of the site, and which, in our opinion, are controversial and/or might deflect a new visitor from understanding the central message of the website. 

We respect that there can be value in these topics, but have found that they can deflect new visitors who may not be ready to engage in this material.  We are not banning or limiting your ability to converse on these topics in any way; we are simply asking that these conversations happen at a location on the site where they will not be prominently displayed to every casual visitor.

Therefore, new threads covering the following topics may be created only in the Controversial Topics folder:

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Other topics which are potentially interesting but not necessarily related to the purpose of this site

There is a long thread on climate change in the CC Chap. 18 forum that is not part of the controversial topics dungeon.

http://www.peakprosperity.com/forum/global-climate-change-it-worth-brushing/5895

Doug

[Moderator's note:  That is an exception, and the one exception which we have allowed since it has been a high quality thread with good discussion.  If that does not remain the case, that too will be moved to the CT folder.  Same case with the Def. Firearms Thread.]

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Damnthematrix
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Re: Australian Power News

[Moderator's Note: The rules are quite clear.  Discussions about global warming belong in the controversial topics folder only.]

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ashvinp
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Re: Australian Power News

[Moderator's Note: The rules are quite clear.  Discussions about global warming belong in the controversial topics folder only.]

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dave s
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Re: Daily Digest - July 27
simentt wrote:

What interests me is the evidence of Peak Oil that abounds without comment from the MSM.  BP funding offshore wind platforms (hat tip Damn the Matrix, comment #22 to yesterday's DD).  Exxon funding alegea growth.  These facts go reported without reflection.  I guess I just continually forget how radical reality really is.

Dave, how much of this is peak oil, and how much is subsidy-farming? If Exxon can get 1.5x return on investments pumping hydro-carbons or get 2.0x return on hiring bio-geeks to grow green sludge in test-tubes, they will at least investigate the sludge-growing business. Obviously, it also is a PR-boon, so it won't even have to be a bigger return for it to be viable.

-S

Well, the ROI in oil has historically been immense.  Far bigger than any other human endeavor I can readily think of in modern times.  Simply look at the quarterly and annual profits of a company like Exxon.  If oil is plentiful, seems to me there is simply nothing to be gained by R&D elsewhere.  I would really have to see some hard evidence that government subsidies for alternative fuels outpace oil profits before I could get where you are going.  And unless oil companies turn into charities and give every dime they make away, there is not enough ink in the world for them to enjoy good PR press. Obviously, R&D on alternative fuels has some small add-on benefit that "Beyond Petroleum" can bring up in its commercials, but that cannot be the raison d'etre for its move into alternative energy supplies. 

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simentt
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Re: Daily Digest - July 27

Dave,

Well, the ROI in oil has historically been immense.  Far bigger than any other human endeavor I can readily think of in modern times.  Simply look at the quarterly and annual profits of a company like Exxon.  If oil is plentiful, seems to me there is simply nothing to be gained by R&D elsewhere. 

Here I agree completely - but we're assuming that oil is not plentiful, right? As our host has shown us, the EROEI (and therefore also the ROI) of Oil is and will be decreasing. Further, with the AGW (not going to make any comments on it)-hysteria, we have seen that all governments are happy to throw money around at good causes if the public is suitably agitated. The focus on 'renewables' has certainly shown this, and scandals like the the Spanish diesel-powered solar-plant show that there are enough subsidies going around to fund otherwise uneconomic behavior.

 I would really have to see some hard evidence that government subsidies for alternative fuels outpace oil profits before I could get where you are going.  And unless oil companies turn into charities and give every dime they make away, there is not enough ink in the world for them to enjoy good PR press. Obviously, R&D on alternative fuels has some small add-on benefit that "Beyond Petroleum" can bring up in its commercials, but that cannot be the raison d'etre for its move into alternative energy supplies.

I don't think the subsidies (or income) on alternative fuels would need to outpace the income from oil for it to be a viable business - the subsidies would only need to make the ROI above one. As long as energy is cheap, this can be achieved with an EROEI of less than one. Of course, oil-companies would probably prefer to invest in oil if oil was plentiful, but the whole idea of peak oil is that it isn't.

My main beef with the subsidies, is that they make it very difficult to see if an activity (like alternative fuel-production) is viable in itself, and therefore if one should be doing it, or rather should be doing something which is.

-S

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