Daily Digest

Daily Digest - May 31, 2010

Monday, May 31, 2010, 10:35 AM
  • Deepwater Horizon: This Is What the End of the Oil Age Looks Like
  • Summer of oil looms for beleaguered Gulf Coast
  • 42,719 Pounds of Minerals for Every American Last Year (2009)
  • China warns debt woes threaten global recovery
  • BP payouts can't save fishing season that got away
  • Global rebound anemic: Roubini
  • Fed chief sees delicate dance ahead
  • Beijing in a sweat as China's economy overheats
  • German president quits amid row

Deepwater Horizon: This Is What the End of the Oil Age Looks Like

But the following should be an even clearer conclusion from all that has happened, and that is still unfolding: This is what the end of the oil age looks like. The cheap, easy petroleum is gone; from now on, we will pay steadily more and more for what we put in our gas tanks—more not just in dollars, but in lives and health, in a failed foreign policy that spawns foreign wars and military occupations, and in the lost integrity of the biological systems that sustain life on this planet.

The only solution is to do proactively, and sooner, what we will end up doing anyway as a result of resource depletion and economic, environmental, and military ruin: end our dependence on the stuff. Everybody knows we must do this. Even a recent American president (an oil man, it should be noted) admitted that “America is addicted to oil.” Will we let this addiction destroy us, or will we overcome it? Good intentions are not enough. Now is the moment for the President, other elected officials at all levels of government, and ordinary citizens to make this our central priority as a nation. We have hard choices to make, and an enormous amount of work to do.

Summer of oil looms for beleaguered Gulf Coast

With BP making yet another attempt to stem the flow from a blown-out Gulf well — this time only to contain the leak, not stop it — signs point to August before any real end is in sight. On top of that, hurricane season begins Tuesday.

"I was just sitting here thinking our way of life is over. It's the end, the apocalypse," said fisherman Tom Young of Plaquemines Parish on the coast. "And no one outside of these few parishes really cares. They say they do, but they don't do nothing but talk. Where's the action? Where's the person who says these are real people, real people with families and they are hurting?"

42,719 Pounds of Minerals for Every American Last Year (Note: this is from 2009, but worth reviewing every year)

Last year, every person in the United States needed more than 21 tons of minerals and energy fuels to maintain their standard of living, according to statistics compiled by the Mineral Information Institute, an Affiliate of the Society for Mining, Metallurgy and Exploration Foundation.

With the life expectancy in the U.S. now averaging 77.8 years, this means that the average American will need to have 3.3 million pounds of resources to be mined to provide the products and materials they will depend upon in their lifetime. The population of the U.S. is over 304 million people, so this means that last year, nearly 6 billion tons of different rocks and minerals had to be mined somewhere, to make the things we use in our everyday lives.

China warns debt woes threaten global recovery

TOKYO (Reuters) – China warned on Monday that Europe's struggle to contain ballooning debt posed a risk to global economic growth, raising the specter of a double-dip recession.

Premier Wen Jiabao, addressing business leaders during an official visit to Japan, issued his warnings a day after France admitted it will struggle to keep its top credit rating and days after a downgrade of Spain's credit status again jolted financial markets.

Some countries have experienced sovereign debt crises, for example Greece. Is this kind of phenomenon over? Now it seems that it's not so simple," Wen said. "The sovereign debt crisis in some European countries may drag down Europe's economic recovery."

BP payouts can't save fishing season that got away

GOLDEN MEADOW, Louisiana (Reuters) – Carol Terrebonne, a wholesale retailer who buys shrimp off the boats in southern Louisiana, laughs when asked about the $5,000 hardship payout she has received from energy giant BP to cushion the economic impact of the Gulf oil spill.

"It barely pays the power bill. I have two facilities and they have ice machines and cold storage," she said in her cramped roadside office, seated beneath pictures of Jesus and the Virgin Mary.

As of Sunday, BP said 26,000 claims had been filed by commercial fishermen, angling guides and others who say they have lost income because of the six-week-old spill, which the White House says is probably the biggest environmental disaster in U.S. history.

Of those claims, 11,650 had been paid for a total of $35 million. Analysts say the British-based company, whose reputation and market value have been battered by the spill, faces billions of dollars in cleanup costs and damages claims.

Global rebound anemic: Roubini

SAO PAULO (Reuters) – Advanced economies face years of anemic growth and the risk of a double-dip recession as their citizens have to cope with sluggish employment and highly indebted governments, economist Nouriel Roubini said on Monday.

"Savings will have to rise faster than consumption for the coming years. That is why growth will remain anemic," Roubini, who heads U.S.-based economic consultants RGE Monitor, told attendants at a seminar in Sao Paulo.

Fed chief sees delicate dance ahead

WASHINGTON – The delicate task ahead for the Federal Reserve and other central banks is deciding when to start boosting interest rates and reeling in all the stimulus pumped out during the global financial crisis, Fed Chairman Ben Bernanke said Sunday.

Bernanke, however, didn't provide any new clues on that front.

Beijing in a sweat as China's economy overheats (SolidSwede)

Guo Shuqing, chairman of China Construction Bank, said that the latest figures for China’s M1 money supply – a key predictor of inflation – had raised concerns that the country’s vast stimulus and bank-lending was running too hot...

“We are seeing a lot of money coming to China which is creating a current and capital account surpluses.”

China’s regulators have introduced a raft of measures in recent weeks in an attempt to cool down the economy, forcing banks to raise the capital adequacy ratios and hitting second home buyers with regulation designed to drive speculators out of the property market.

German president quits amid row (Regina F.)

Mr Koehler, 67, was re-elected last year to serve a second five-year term as president.

He made the controversial remarks in a radio interview after a brief visit to Afghanistan earlier this month.

He said that for an export-orientated country like Germany, it was sometimes necessary to deploy troops "to protect our interests... for example free trade routes".

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Re: Daily Digest - May 31, 2010

"ATHENS — Greece's debt-plagued state hospitals faced a supply embargo after providers rejected Saturday a government compromise plan to repay billions of euros owed for equipment and medicine purchases.

"This proposal forces our companies to shut down altogether," Panagiotis Stravolaimos, head of the association of science and health providers (SEP) told Mega channel on Saturday.

"I do not think there is any possibility of agreement on this," he said."

"May 31 (Bloomberg) -- Europe’s sovereign debt crisis is making financial institutions reluctant to lend, threatening to choke off credit to the region’s banks and consumers, said a senior executive of Banco Espirito Santo SA.

“There is a problem with the real economy, because now credit is shortening completely,” said Jose Maria Espirito Santo Ricciardi, head of the investment banking unit of Portugal’s largest traded bank. “I will not say capital markets are completely closed, but it has been difficult, more for the banks than for sovereigns. Namely, the medium and small banks are having problems.” "

"May 31 (Bloomberg) -- Dollar bonds sold by China real estate companies this year are the worst performers among Asian non-financial corporate debt denominated in the U.S. currency amid concern the nation’s property market is overheating."

"Investors are demanding greater yields to lend to China property firms, a sign they expect borrowers will have a harder time meeting debt payments amid a government clampdown down on lending. "

"THE Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy.

The Centre for Economics and Business Research (CEBR), a London-based consultancy, has warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. The only way this can happen is if Greece returns to its own currency."

"The European debt crisis has rippled into one of the last redoubts of safety for U.S. investors: money-market funds.

Money funds are thought to be low-risk because they invest in high-quality short-term debt issued by governments and big corporations. But many funds are holding big slugs of European bank debt. As of March 31, nine of the top 10 corporate issuers of short-term debt held by Moody's-rated U.S. prime money funds were big European firms. "

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Re: Daily Digest - May 31, 2010

Chris, saxplayer,

Thanks for taking the time on Memorial Day to post. The '42,719 Pounds of Minerals for Every American Last Year' is sobering!


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Re: Daily Digest - May 31, 2010


US House votes quadrupling of per-barrel oil tax

28 May 2010

The US House of Representatives on Friday voted to more than quadruple a per-barrel oil tax that fills a special trust fund to pay for damages from major spills like the Gulf of Mexico disaster.

The measure called for raising the eight-cent-per-barrel tax to 34 cents, raising nearly 12 billion dollars over 10 years for the Oil Spill Liability Trust Fund, which currently holds about 1.5 billion dollars.

The legislation, which passed by a 215-204 margin, also aimed to raise the cap on per-incident trust fund expenditures from one billion dollars to five billion dollars.

Some analysts have warned that the price tag for the catastrophic oil spill that resulted from the explosion aboard the Deepwater Horizon offshore drilling platform run by BP could top 14 billion dollars.

BP is legally responsible for all cleanup costs, but is only liable for up to 75 million dollars in economic damages -- a cap that vanishes if the British energy giant is found to have been negligent or engaged in willful misconduct.

To the extent that costs above that are not covered by BP -- which has vowed to pay all "legitimate" claims -- up to one billion dollars of the additional damages could come about of the trust fund.

The legislation approved Friday would raise that ceiling to five billion dollars.

The Senate was expected to pass a different version of the bill when it returns from next week's break, meaning that the two chambers would have to agree on a compromise version to send to President Barack Obama.

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Re: Daily Digest - May 31, 2010

HP to Invest $1 Billion in New Enterprise Services, Axe 9,000 Jobs over a Multi-Year Period (story to follow)

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Re: Daily Digest - May 31, 2010

 Hewlett-Packard will invest $1 billion to relaunch its enterprise services as it consolidates various aspects of the division, the company said in a press release Tuesday.

Hewlett Packard

The world's biggest PC maker said it expects to make annual savings of about $1 billion after reinvestment of $500-$700 million. It will consolidate its enterprise services' commercial data centers, management platforms, networks, tools and applications, the company said.

The $1 billion charge associated with the development will be spread over a multiyear period, the California-based company said.

As part of the re-launch, Hewlett-Packard expects to cut roughly 9,000 positions over several years.

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