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Financial Crisis Tab Already In The Trillions

Wednesday, November 19, 2008, 5:25 PM

When this sort of information goes mainstream (CNBC), it's time to batten down the hatches.

Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved.

Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.  

Not only is it a astronomical amount of money, its' a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what's called the financial crisis, but it is arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve's umbrella, while another 16 percent is the under the Troubled Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October.

Fin_Crisis_Balance_Sheet_CNBC11-19-2008.jpg

Note: 4284.5 billion = $4.2845 trillion.  Or  a stack of thousand dollar bills 299 miles high. If you were on the space shuttle you'd still have 100 miles of thousand dollar bills towering above your head.

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46 Comments

hpernar's picture
hpernar
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Re: Financial Crisis Tab Already In The Trillions

Should we just stop counting now?

I think it is the matter of days before everything goes to hell

Creative Investor's picture
Creative Investor
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Re: Financial Crisis Tab Already In The Trillions

"The Great Bear Marathon'
By a guy from Facebook.

Joe likes to run. In the World Race 2: All-Stars, he stunned the world by outperforming his arch-rivals from Germany, Italy and Japan… Joe had some rough times with his Vietnamese girlfriend, but he made a comeback in the 1990 I-Rock Marathon.

Joe is confident Alpha Male. He brags his ever ‘bullish’ power whenever he gets his chance. Perhaps this is why Joe has decided to run again, despite warnings from his brothers like Peter Schiff and Ron Paul… Joe signed up for the challenge.

“You are either with me or against me. I am the champ. I’m the Alpha.” Joe said…
Everyone thought Joe was nuts.

“This race is unlike all the other races that you’ve ran, you haven’t trained your body for the last few years. You are in no condition to run! If you so wish to run, at least build your body while you still have a chance…” Brother Ron said.

Joe ignored the advice, calling him crazy, and weak.
But Joe had other motives… Joe has been spending like crazy by loaning money from his associate, Hu. Joe’s exceptional performance gave confidence to Hu that Joe can continue to win marathons and make decent money. Recently, Joe’s pocket has been getting slimmer… Joe needed money… He already has ‘I-Ran Marathon’ in mind. He needed the latest Abraham shoes and Patriot pants. Joe had to win, no matter the cost.

“The Race of Death”

When the race began, he felt something unusual. His heart was beating faster than usual. His muscles tight… Joe ran only 1/10 the way into the marathon, and Joe was falling behind... he was dehydrating. Joe's coach 'Ben' decided to shoot him up with morphine to ease the pain, rather than giving Joe the much needed water. “Water will only slow you down, this drug is certified by Cox and Paulson Inc., the safest drug makers in the world! Now, don't think, don't question, just run as I told you!” Ben said.

Joe ran for another 1/10, and the drug started to wear off...
Ben frantically injected another load of goodies into Joe.

His muscles were now breaking apart, his foot was cracking and bleeding, his eyes were getting dry...

Ben's friend Aso, Hu and Brown were concerned about Joe's conditions... warning Ben that continued drug use will knockdown Joe, even to near death. Spectators, who bet their money on Joe's win, were furious on Joe's performance. Spectators felt they were cheated, and their anger grew as minutes passed. Hu, too, was spooked. Hu, now wanted Ben to sign a document allowing Hu to sell Joe's organs in case of Joe's unfortunate death in the race.

Joe was failing...
His vision was getting dimmer.
His legs… tiring...
Each step, his foot felt like walking the field of broken glass.
Joe was longer the champion he was once was… shaken and stirred. Joe wasn't even nearing the halfway point. His steps were beginning to shake.


Ben readied yet another round of morphine.
Shocked, Joe’s brother Ron asked Ben to stop the madness…
Ben replied with a smirk, “I'm the doctor. The Game must go on…"

pir8don's picture
pir8don
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Re: Financial Crisis Tab Already In The Trillions

Couple of questions for us non americans. I assume CNBC is the Canadian National Broadcasting Corporation right?

and how much is that each for you adult americans?

Don

switters's picture
switters
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Paulsen & Co. have spent $14,016 per American!

CNBC is a cable business news network that is owned by NBC. 

So far Paulsen & gang have spent $14,016 per American, assuming a population of 305,000,000.  If they would have asked me, I certainly wouldn't have given them $14k to bail out their rich buddies.

 

Erik T.'s picture
Erik T.
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Re: Financial Crisis Tab Already In The Trillions
cmartenson wrote:

Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.  

This is truly amazing... Even why they are obviously trying to make the point that this is a lot of money, they report it as "4.28 trillion dollars" when the actual figure is $4,284,500,000,000. So we've actually come to the point where four and a half BILLION DOLLARS is just a trivial rounding error unworthy of mention. That's more than Ted Turner's net worth!

Erik

 

joemanc's picture
joemanc
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Re: Financial Crisis Tab Already In The Trillions

Bush, Bernanke, et. al., are laying the dynamite and Obama is going to detonate it.

joe2baba's picture
joe2baba
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Re: Financial Crisis Tab Already In The Trillions

dear dr. martenson

if i were on the space shuttle i would not come back. please havemy mail forwarded.

joe

Ray Hewitt's picture
Ray Hewitt
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Re: Financial Crisis Tab Already In The Trillions

That puts into perspective the insanity of buying Treasuries as a safe haven. Think about it. The federal government is the largest debtor in the world - no contest - and they have an AAA rating. The rating companies are either delusional or too shit scared to drop the fed's bond rating.

The case for owning gold and silver gets stronger by the day. All hell is going to break loose when the bond market crashes. This stock market swoon is a wart by comparison.

 

scotttherrien's picture
scotttherrien
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Is the US too big to fail?

 

 This is a great read for those thinking about backwards relationship of the US dollar and our debt 

http://www.voxeu.org/index.php?q=node/2568

could it be....deflation, continued consumer spender (while weaker), monetization of debt AND a strong dollar??

Ray Hewitt's picture
Ray Hewitt
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Re: Is the US too big to fail?

The bigger they are, the harder they fall.

castlewp's picture
castlewp
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Re: Is the US too big to fail?

Congressman Joe Knollenberg says it's not our money.  You can't make this stuff up

http://www.youtube.com/watch?v=6ZyAd_rJAx4 

Xflies's picture
Xflies
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Solutions people...Solutions, The Martin Movement is great

and the job of informing the public so that we can get a true forum of educated debaters together to form a solution is imperative but that's just it... the end game to all of this is to form possible solutions. To throw up our hands and give up is not a solution. To armchair quarterback is Not a solution. To board yourself up and stock up on ammunition and food is NOT a solution.

I've posted several times for people to come up with credible solutions so that everyone on this site can do their part and send them to the appropriate policy makers. God knows that they don't have all the answers and very well might accept the help. How many people have taken up the challenge to writing up a good solution? None... that's right... None. Maybe I've missed some posts so I'll take it all back when we see some good suggestions.

Now what makes a good suggestion? Great question! If it stands the test of this board and the scrutiny of all those who spend so much effort criticizing those who are trying to fix things, then damn... that's good enough for me and it should be passed on to your representative of government. What's the acid test? Well another great question... if you can recite your solution to your spouse, neighbour, friend, kids... and their eyes don't gloss over or they don't puke on you or tell you that you're crazy ... well then that's a pretty good start. Throw your suggestions on the board, but be forewarned... if it's something like "Laissez-faire rules, let capitalism at its pure form envelop those money losing, union strapped companies and fold them all into the ground - to hell with them, if they can't make money, they don't deserve to live" well then be prepared to explain to all those who are disrupted by your purist ideals and their kids ...

"that the world is such a mess because of some greedy bastards on Wall Street... Oh and by the way, sorry for your luck, it sucks to be you".

thefroggydude's picture
thefroggydude
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Re: Financial Crisis Tab Already In The Trillions

So are you angry yet???  Maybe this will help.

http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

thefroggydude's picture
thefroggydude
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Re: Solutions people...Solutions, The Martin Movement is ...
Xflies wrote:

I've posted several times for people to come up with credible solutions so that everyone on this site can do their part and send them to the appropriate policy makers. God knows that they don't have all the answers and very well might accept the help. How many people have taken up the challenge to writing up a good solution?

.

There is only one solution but don't bother sending it to your congressman, senator or incoming president.  It will not be implemented because neither they nor the average Joe American will support it.  The solution?  Implement a sound monetary system based on gold &/or silver and eliminate the Fed.  In other words, obey the constitution.  Why won't it fly?  Because everyone expects something for nothing and this cannot happen within a sound monetary system.

Ruhh's picture
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Re: Financial Crisis Tab Already In The Trillions

I think that if they wanted to "stimulate the economy" they could have given US citizens even half of that 14k (as per #4 switters) and told them to spend it or put it down on their failing morgate. Create a giftmas shopping spree just before the collapse? Everyone could stock up on ammo and water filters!

Joking aside. What happens when no other countries want to deal in USD? I certainly don't want anything to do with it anymore.

What exactly would (or more likely will) happen when the USD is devalued?

What exactly happens to eveyone's debt or savings?

switters's picture
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Re: Financial Crisis Tab Already In The Trillions

Take a hint from the Chinese and spend the stimulus on developing infrastructure and investing in our manufacturing capacity, which we need badly to make the transition to renewable energy.  Develop an electrical grid that is capable of storing and transmitting electricity generated by wind and solar.  Subsidize the development of PHEVs.  Rebuild the rail system and modernize it to run on electricity.  Etcetera. 

I can think of any number of better uses for the money than funneling it into the pockets of the corrupt bankers and CEOs that caused this mess in the first place.  

The UN has estimated that it would only take a couple hundred billion to end world hunger, for crying out loud. 

Buckfush's picture
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Re: Financial Crisis Tab Already In The Trillions

Xfiles,

Nice to have you back........

Ruhh's picture
Ruhh
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Re: Financial Crisis Tab Already In The Trillions

 Xflies,

There isn't much I'd add at the moment that switters hasn't said (#16) besides to check out The Venus Project. Sure it sounds a tad too utopian but I think we can get some sound ideas there.

 

And they were worried that Kyoto was going to hurt the economy!?!

Xflies's picture
Xflies
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Re: Financial Crisis Tab Already In The Trillions

Switters and many others seem well informed and willing to share their views... this is exactly the type of post I like to read but just a few points to your suggestion...

 I trade physical natural gas and understand the power markets pretty well.  The main problem with your suggestion is that it is impossible for any large power grid like the one in the US to rely heavily on wind.  In fact, a few years ago when the Brits were facing brown outs, one of the first things they did was eliminate wind from their system.  Why would they give up a source of power?  Quite simply that wind is too volatile to depend on so to build a contingency or a system around such volatility would have been impossible and inefficient.  Wind is a valuable source of energy when it is used only in part of the overall power supply.  Wind can never be a substantial amount of the overall power supply.  The problem with solar is in its efficiency and current technology not to mention the rare earths required to create the new thin-film solar panels needed to paint the tops of every roof top.

 Another problem is the time it takes to implement some of these large infrastructure changes.  While overall spending can induce stimulus, it doesn't solve the current financial crisis we face today.  Is a bandaid fix required to bridge us over?  Maybe... quite likely.  Will it be the perfect long term solution?  Nope, probably not but time buys many things including the opportunity to implement some of the longer term projects like infrastructure.  I would throw out that one of the first things you could do that would have an immediate impact is to swallow the bullet and create a carbon tax credit or a version of a cap and trade system.  This would increase spending in the areas that need it including the increase of natural gas power generation.  The electric car would also go a long way to reducing power volatility and reducing the overall cost of transportation.  This summer the oil/gas ratio hit a record high of almost 16:1 when the energy equivalent ratio is around 6:1.  Cars that are powered by electricity produced by natural gas power generation will bridge the gap giving the country the ability to arbitrage this oil/gas ratio imbalance.  There are, of course, problems to this and it is in battery availability and technology but there is currently technology out there that will charge up a battery in less than an hour and allow the car to run 150km on a single charge which is more than most people drive during a day.

 Anyways, let's see more suggestions, critique them and get a plan going... time is of the essence.

Damnthematrix's picture
Damnthematrix
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Re: Financial Crisis Tab Already In The Trillions


http://www.marketwatch.com/news/story/citi-shares-record-slump-credit-default/story.aspx?guid={CBD75AB7-DE8D-4B01-BA17-C34DA4901487}&dist=TNMostRead
Citi shares in record slump, CDS spreads widen
Bank takes on $17 billion of SIV assets, shuts another hedge fund
By Alistair Barr, MarketWatch
Last update: 4:41 p.m. EST Nov. 19, 2008

SAN FRANCISCO (MarketWatch) -- Citigroup Inc. shares slumped a record 23% Wednesday and credit-default swap spreads on its debt widened after the bank took on more than $17 billion in assets from structured investment vehicles and shut another hedge fund.

Citi shares slumped 23% to close at $6.40. The previous biggest one-day drop was 21.7% during the market collapse on Oct 19, 1987.

CDS spreads on Citi were trading at more than 360 basis points during afternoon action, up from a 240 basis points yesterday, according to Phoenix Partners Group.

CDS are a common type of derivative contract that pay out in the event of default. When CDS spreads widen it means investors are willing to pay more for protection against defaults. A spread of 360 basis points means an investor buying $10 million worth of protection must pay $360,000 a year.

Citi said it will purchase the final $17.4 billion of assets still in structured investment vehicles, or SIVs, that the bank advised.

SIVs sell short-term debt and use they money to invest in longer-term, higher-yielding assets. During the credit boom earlier this decade, these vehicles became a popular way for some banks to grow assets without adding extra stress on their balance sheets. But when the credit crunch hit, SIVs couldn't refinance their short-term debt. That forced banks including Citi and HSBC
to take the assets onto their own balance sheets.

In December, Citi said it would take $49 billion of assets from SIVs it advised onto its balance sheet to resolve concerns about how the vehicles were going to repay their debts.
The SIVs in question have been selling assets since then, and now have $17.4 billion left, Citi said Wednesday. Taking on this final chunk of assets will mean the SIVs have enough money to repay senior debt obligations that are maturing, the bank said.

Citi estimated that it needs to provide $300 million in extra funding for the transaction to close.

Citigroup CDS led an increase in counterparty credit risk in the derivatives market Wednesday, according to Credit Derivatives Research.

The CDR Counterparty Risk Index, which tracks credit-default swaps on leading banks and brokerage firms, rose 12.3 points to 263.9 during midday action.

CDS spreads on Morgan Stanley , Bank of America , J.P. Morgan Chase and Wachovia were all wider by at least 15 basis points, CDR said.

"Citigroup showed the greatest deterioration on news of hedge fund closures and SIV takeovers," David Klein, manager of CDR's credit indexes, said in an e-mail.

Citi is shutting down a corporate credit hedge fund called Corporate Special Opportunities after it slumped more than 50% in October.

"As with many other credit-based investment products, investment returns have been hurt by one of the most volatile periods for fixed income in history," a Citigroup spokesman said in a statement Wednesday.

In February, Citi suspended investor redemptions from the fund, which once had more than $4 billion in assets. See full story. The value of the fund's assets has now dwindled to less than $60 million, while its debt is about $880 million. That may leave investors with recoveries of no more than 10 cents on the dollar, according to the Financial Times.

Citi lent the hedge fund money and bought assets with a notional value of $1 billion that it put in the fund, the FT reported.

Losses for Citi could total hundreds of millions of dollars, the newspaper said.

Damnthematrix's picture
Damnthematrix
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Re: Financial Crisis Tab Already In The Trillions

Hi Xflies

I'm a retired renewable energy systems designer, though not grid sized ones.  What you and everyone else here needs to realise is that Business as Usual will NEVER run on RE.  However, it is possible to make hay whilst the sun shines.  So if the wind blows and the sun shines, it's off to work we go.  If it don't....  have the day off.  Welcome to the new green sustainable world [dis]order.....  It's How I operate now.

BTW, thin film PVs do NOT have to have rare earth resources.  I run thin film Silicon PVs here, and they are great, and cheap, and have low embodied energy.  All this new hi-tech PV stuff may never see the light of day (pun intended) and is a total waste of time.  We have viable technology that works NOW, so let,s stop mucking around.

 Now, how do we fund it?  CANCEL THE DEBTS....

I don't know how many times I have to say it.  I see no other solution to an out of control debt problem.  Does anyone? 

James Wandler's picture
James Wandler
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Posts: 219
Re: Solutions people...Solutions, The Martin Movement is ...
Xflies wrote:

I've posted several times for people to come up with credible solutions so that everyone on this site can do their part and send them to the appropriate policy makers.

Xflies, 

At the grassroots level the changes I see that are needed are: living sustainably, small diversified sustainable farms, biodiesel projects, complementary currencies, renewable energy, retrofitting existing houses for energy efficiency...  All of these things can be achieved at the grassroots level but they do take time, research, and experience.   I hope that people that are successful in the money world will put their focus in this direction since their skills are needed.  Making connections between people already doing these things is also part of the solution.

This has been discussed further in a subscriber forum:

http://www.peakprosperity.com/forum/canada-eh/8599

For what Chris would do at the macro level I believe that his strategy would be to protect the US dollar at all costs (which would be to let deflation play itself out, get to a bottom and avoid the whole hyperinflation scenario).  I searched and searched the site but for some reason I just couldn't find his post on this topic. 

I fully agree with such a course of action although it would involve so much wealth destruction that it is beyond reckoning.  However this would be better than the hyperinflation to come since the pedal is firmly down to print money.  Deflation (decline in the money supply of currency and credit) is occuring because of structural problems in the economy and the bad loans are being written off which means that money is destroyed.  However the Fed is printing money by taking bad assets from US Banks in exchange for cash - this does fight deflation since, by magic (printing money), bad loans disappear onto the Fed's balance sheet and the US Bank gets cash.  This is currency money to replace the bad credit money (remembering that both are identical - I'm just using the different terms to identify the original source of the funds).  Thus the deflation (bad loans) is fought off by replacement with new cash.

Meanwhile the US Banks are also receiving equity from the US Treasury - which increases Federal debt (and if third parties aren't buying the debt is the Fed buying the debt and issuing cash?  - if so it further increases currency money - and in a roundabout way deflation is fought off by replacement with new cash since the equity allows for other assets to be written down).

So why isn't this working?  It simply isn't enough.  Mortgages would still need to be restructured - are all of the associated losses already recognized (including off balance sheet - and who holds these - nonUS banks?)  How about the negative feedback loop in the system from the depression (which is where I believe we are in the early stages) where job losses lead to a decline in purchasing and more auto / credit card / student loan defaults?  Some money went into consumer's hands who can make payments but which shifts the losses to the Federal Govt - if the Fed is printing money to do this this would help fight off deflation.

End result?  Print too much money and hyperinflation ensues.  Succeed in just fighting off deflation - then hyperinflation will come but not imminently - the debt would just continue to skyrocket and a lot of the losses have shifted to the USGovt.  Future for the US dollar?  Not good to say the least.  When?  At any time - or years.

What to do?  See my post at the top re: grassroots actions.  Chris would add spreading the word to as many people as possible so that they can prepare, make informed choices, and guide politicians.  I agree with these steps and intend to help him in these efforts. 

I hope you'll help Chris by joining the Martenson Volunteer Brigade.

All the best,

James

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gyrogearloose
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Re: Financial Crisis Tab Already In The Trillions
Damnthematrix wrote:

I run thin film Silicon PVs here, and they are great, and cheap, and have low embodied energy. 

 

.....  CANCEL THE DEBTS....

I don't know how many times I have to say it.  I see no other solution to an out of control debt problem.  Does anyone? 

As to cancelling debt, My wife and I have been responsible and saved and have a mortgage free house and had money in the bank. An aquaintence has made the most of easy credit and so is now mortgage to the hilt with shitloads of "toys" he brought on credit, traveled overseas etc. Now you want to cancel his debt, which also means you have to cancel MY savings ( if I still had them Wink I have removed them from the banking system...) 

NO WAY. Bankrupt him and give me his toys. 

 

 In another thread ( it had grown rather large ) replied to you with the
below but you had not answered, so since you are back on the subject
here it is again.

Since I am a bit of a PV sceptic I had not dug deep, just remembered an
article pointing out that that there was not enough Indium to make
enough solar panels as was being proposed by someone,     Beautifully
vague am I !

Nothing on Unisolar's site about what they use as dopants or
conductive films ( Indium Tin Oxide one of the common ones I presumed )
Frustrating in these days of instant answers!

On payback, how much did you get your panels for ?. Quick search on
the net yielded a cheapest price of NDZ 485, and assuming 6 hrs per day
at peak power, no other costs considered gave a 17 year payback. 

then had a quick look at this site ( first up on google ) http://www.solarbuzz.com/statsCosts.htm

Again as a PV sceptic, how do you get a 2 year payback ?

In Canterbury we get 2100 hrs per year of sunshine, How does that compare with you ? ( tried to find it but no luck...)

Thanks for the bit on your passive solar house, but as you say allot
is site specific, and I  Already know how to do it, just working around
the compromises/advantages caused by our site while keeping the wife
happy with the style ;-)

As for hyper efficiency, do you use at chest type fridge ? ( one
where the door lifts up ) Saw a blog where a guy had tested out using
an old chest freezer as a fridge, and though details are a bit vague
now, I recalled that the difference in energy consumed was big. One of
the big savings being no flood of cold air out of the door each time
you open it.

Started cursory look at LED's for lighting.  Latest efficiency is
not to bad, but boy the lifespan. We have had all compact fluorescents
for ages now, but lately sort of suspecting they don't last as long as
claimed, so have taken to writing start date in the base when we put a
new one in. now we wait.....

Cheers Hamish

 

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pir8don
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Re: Financial Crisis Tab Already In The Trillions

Hi gyrogearloose (bit off topic but never mind)

I'm in Nelson with 1kw purchased about 4 years ago for NZD6 per watt. We did it from our sustainable beliefs rather than any sense of economy but we previously used around 13kwh per day and we now have that down to around 4 as a result of giving so much attention to our use. No power bill is more than $50 per month and some as low as $20. Use wood for heating, wetback and solar for hot water. Use laptops for computing to save power. We could get a bit more economy if we had more reliable peak point chargers and turned our panels to follow the sun.

Don

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fujisan
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Re: Is the US too big to fail?
scotttherrien wrote:

 

 This is a great read for those thinking about backwards relationship of the US dollar and our debt 

http://www.voxeu.org/index.php?q=node/2568

could it be....deflation, continued consumer spender (while weaker), monetization of debt AND a strong dollar??

This "exorbitant privilege" is one reason explaining why USD did not collapse yet as it should. IMO US military power is another reason.

 War in Irak was also (mainly ?) conducted to insure USD remains the currency of most International trade and reserves. Remember, Saddam did ditch dollar and decided trade Irak's oil in Euro. This "unacceptable" dollar weakening was prompty restored as soon as Irak's oil came back on the market.

Guess what with Iran, another "axis of evil" ???

http://en.wikipedia.org/wiki/Iranian_Oil_Bourse 

For these reasons, the dollar is ARTIFICIALLY strong and I believe it will take years before it goes to its intrisic real position, a MUCH WEAKER currency.

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fujisan
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Re: Financial Crisis Tab Already In The Trillions
Damnthematrix wrote:

Now, how do we fund it?  CANCEL THE DEBTS....

I don't know how many times I have to say it.  I see no other solution to an out of control debt problem.  Does anyone? 

Well to cancel the debts, one cancel both debtors and CREDITORS. This would mean cancel all Treasury notes and bonds. Could this append? Indeed this has already appended at least once in History. After the bolchevic revolution in 1917, the bolchevic gov' refused to pay for any bond issued by Czar's gov'. For years, they lost almost all their value. Nevertheless, these were still valid liabilities. They even made a come back recently as Yeltsin made an agreement with France.

An UK Times' article dated back in 1950:

http://www.time.com/time/magazine/article/0,9171,812101,00.html

A NY Times' article dated 2000:

http://query.nytimes.com/gst/fullpage.html?res=9B04E4DC113BF93AA25752C1A...

So one could cancel the debts, but cannot cancel the US Treasury bonds & bills. Who is holding these bonds? Many are in the hands of chinese, arabic, sovereign wealth funds... What do you think would happend if US Gov' decides to stop paying for its Treasury bonds? These are essentially IOU, but are these "I Owe You" or "I OWN You" ? We know the chinese are willing to aquire technologies for their own use. Once the US economy will be in great depression # 2, it'll be US game over... Then either US gov' agree chinese and others to take control of "non-strategic" companies, or it will start yet another war.

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Re: Solutions people...Solutions, The Martin Movement is ...

Good for you for trying to get people to refocus on a positive direction and effort. It's kind of hard to tear your gaze away from the train wreck in slow motion that is the US economy at the moment. Y'know? Keep proding and eventually some will be able to shake off the shock and respond. Wink

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Re: Financial Crisis Tab Already In The Trillions

The thread you mantion went over 70 posts, and the 'next page' URL just wouldn't work for me and I gave up..... so we meet again! 

I don't consider money payback, because frankly I don't CARE how long my PVs take to pay for themselves.  What REALLY matters is how long they pay back the ENERGY required to make them.  Energy is the one and true currency.  Once we are in energy descent mode, you won't care how much your power costs so long as you can get some!

In a paper titled  PV FAQ's: What is the energy Payback for PVs you can read:

Thin-film PV modules use very little semiconductor material. The major energy costs for manufacturing are the substrate on which the thin films are deposited, the film-deposition process, and facility operation. Because thin-film PV technologies all have similar energy requirements, we’ll use amorphous silicon as our representative technology.

Alsema estimated that it takes 120 kWh/m2 to make frameless, amorphous-silicon PV modules. He added another 120 kWh/m2 for a frame and support structure for a rooftop-mounted, grid-connected system. Assuming 6% conversion efficiency (standard conditions) and 1,700 kWh/m2 per year of available sunlight energy, Alsema calculated a payback of about 3 years for current thin-film PV systems with frames. Kato and Palz calculated shorter paybacks for amorphous silicon, each ranging from 1 to 2 years.

http://www.nrel.gov/docs/fy04osti/35489.pdf

We have 20 panels.  20x240 kWhrs =  4800 kWhrs.  We have now generated 5020 kWhrs (just read the meter!) in two years four months.  Looks to me like their figures are SPOT ON!

We have a debt free house too.  I don't get my knickers in a knot over canceling debt.  I'm more worried about my children's inability to be able to raise cash to buy themselves an affordable house in the future. 

Re:  
As for hyper efficiency, do you use at chest type fridge ? ( one
where the door lifts up ) Saw a blog where a guy had tested out using
an old chest freezer as a fridge, and though details are a bit vague
now, I recalled that the difference in energy consumed was big. One of
the big savings being no flood of cold air out of the door each time
you open it.

Funny you should ask, we are waiting for my wife's tax return to do exactly that.   http://mountbest.net/chest_fridge.html

You're right about the latest crop of Chinese CFLs.....  they are crap! 

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Re: Financial Crisis Tab Already In The Trillions

fujisan

What makes you think bonds will be worth ANYTHING in the future?  I don't think you guys understand what a collapse is..... 

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Re: Financial Crisis Tab Already In The Trillions

Hey Matrix, great to see your insights here... I thought that Gallium was a key component to these new thin-film panels but I guess I was wrong. 

 Quesiton for you... how do you propose that we just "Cancel the debts"?  After coming out with a detailed explanation of how you will do it, consider the implications step by step, that would really help.

 Thanks!

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Re: Solutions people...Solutions, The Martin Movement is ...

Sorry man, I gotta disagree with you here... but this is what exactly I wanted to see, good debate on solutions so we come up with something that can really work.  I don't think the US needs to protect their currency... it's doing very well on its own.  In fact, it is somewhat of a problem since the US currency is almost 'too big to fail' and with a global economy, the world would be better served if there was more than 1 'goto' currency.  In a global economy, it would be safer to have several strong nations rather than everyone hording the US greenback.  Also, I think that we do need some inflation and that hyperinflation is not a foregone assumption.  With the problems we face, I doubt very highly that hyperinflation will come so quickly that we won't be able to do things to slow it down... the next generation's propensity to save will be the biggest factor to helping slow down hyperinflation, in my opinion.

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Ron Paul on the End of the Fiat-Dollar System

http://www.lewrockwell.com/blog/lewrw/archives/024086.html

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Re: Financial Crisis Tab Already In The Trillions

Damnthematrix,

I'm belgian, you may call me Joe the belgian. I'm not expert by any means, but I believe the whole US economy won't collapse all at a sudden. It'll take years. Surely the dollar is much overvalued. In a normal economy, the dollar would already have been devaluted, but it's still the world currency reserve (about 60% of all WW reserves).

At one time, I don't know when, the US ecomony will become so depressed, with so many bankrupts, the US Gov' will ask help from other countries: mainly China, and possibly others (arabic ?). The Chinese will then be in a position to impose their conditions. They might trade their T-bonds for some companies, even strategic ones, just to aquire their technologies. They could well trade the T-bonds for half their face value or even quater of it.

I'm no expert by any means, so I'm not sure the following make sense: The US Gov' may then destroy the T-bonds it just got back, reducing its debt. Indeed just the reverse of creating money.

Will there be yet another war at some time ? Could the Chinese and Russian become allied ? (russian nuclear missiles - cold war # 2) Who knows ?

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Re: Financial Crisis Tab Already In The Trillions

Had assumed thread size was an issue, it took me a while to find to repost here!

Mountbest bookmarked.... Smile  Looks like there might be a few snippets in there.

CF test over then..... Told my wife about LED's and their life expectancy and worked out that most likely we would not have to change a "bulb", Got a laugh from her.

If you are worried about your kids inability to borrow..... don't advocate wiping debts. If savers get scared they will lose their savings by debt being wiped, why would they save. They would take their money out of the banks ( I have !!! ) oops isn't that how bank runs start Undecided    then argh, no bank to go to to borrow money to buy that house.

 

PV payback. Read the site. It smells to me of  selective inclusions/exclusions.

Read  http://www.jeffvail.net/2006/11/energy-payback-from-photovoltaics.html

Strangely, total cost seems to do a fairly good job of accounting for all the embedded energy in an item.

A few years ago a friend was commenting  was commenting on how much it was going to cost to get power to his house and I told him to go solar/wind. Payback was instant as the off grid ( over-sized compared to what you have ) still cost less than getting grid connection. Even system maintenance and capital replacement allowances are less than the power bill the would have had. Ahead in every direction.

Still a PV sceptic when it comes to replacing grid power if you are right by the grid.

Saw an article that claimed the Hummer was greener than a prius Tongue out but here is article does a good job of covering that topic.

http://www.thecarconnection.com/article/1010861_prius-versus-hummer-expl....

Explains fairly well the how many bits are left out of "payback" calculations and how "Fuzzy" the answer can become.

So I contend that a good rule of thumb of payback should be simply the cost ( excluding govt subsidies ).

Companies don't usually "conviently" leave out the cost of certain aspects of making the item.

Cheers Hamish

 

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Re: Financial Crisis Tab Already In The Trillions
fujisan wrote:

Damnthematrix,

I'm belgian, you may call me Joe the belgian.

REALLY!  I was born in Anderlecht.... 

fujisan wrote:

I'm not expert by any means, but I believe the whole US economy won't collapse all at a sudden. It'll take years. Surely the dollar is much overvalued. In a normal economy, the dollar would already have been devaluted, but it's still the world currency reserve (about 60% of all WW reserves).

How do you arrive at five years?

 

fujisan wrote:

At one time, I don't know when, the US ecomony will become so depressed, with so many bankrupts, the US Gov' will ask help from other countries: mainly China, and possibly others (arabic ?). The Chinese will then be in a position to impose their conditions. They might trade their T-bonds for some companies, even strategic ones, just to aquire their technologies. They could well trade the T-bonds for half their face value or even quater of it.

You've left one major factor out...  Peak Energy.  Without growing energy, growth is finished, without growth we have an entirely new ball game..

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Re: Solutions people...Solutions, The Martin Movement is ...
Xflies wrote:

I don't think the US needs to protect their currency... it's doing very well on its own.  In fact, it is somewhat of a problem since the US currency is almost 'too big to fail' and with a global economy, the world would be better served if there was more than 1 'goto' currency.  In a global economy, it would be safer to have several strong nations rather than everyone hording the US greenback.  Also, I think that we do need some inflation and that hyperinflation is not a foregone assumption.  With the problems we face, I doubt very highly that hyperinflation will come so quickly that we won't be able to do things to slow it down... the next generation's propensity to save will be the biggest factor to helping slow down hyperinflation, in my opinion.

 

The US$ and all fiat currencies are doomed.  It is just but a matter of time before they all fail.  Go back through Chris' Crash Course where he speaks of exponential functions.  The world's fiat currencies rely on perpetual growth to survive (since money = debt) ... otherwise how do you pay the interest?  No tree can grow to the moon.  The US$ is doing well for the time being but this is just an intermediate term bounce in a long term bear market.  The bailouts and stimulus packages offered to date and yet to be proposed and implemented cannot and will not work.  Either these measures will be inadequate and deflation will reign or the amount of new money needed to stop the deflation will overwhelm the system and result in hyper-inflation.  In the end all malinvestments (unproductive assets) of the past 95 years (since the creation of the Fed in 1913) must be liquidated.  The market will not be denied.  There are only 2 ways to liquidate these malinvestments.  Either through an inflationary depression or through a deflationary depression.

 

You are right about one thing though.  We all need to spend less and save more.  The problem is that interest rates in a world of central banks are not set by the market but rather by the CBs.  If governments cannot know the price to set for a pair of shoes in order to balance supply and demand how can they possibly know how to price the most important price of all ... the price of money?  They are motivated to set the interest rate too low in order to stimulate growth.  However this has the unintended consequence of discouraging savings while encouraging spending.  Why save when the after tax rate of interest is lower than the rate of inflation?  The CBs are the ones that have gotten us into this mess.  The only solution is to get rid of the CBs and let the market find a clearing interest rate where supply of credit (savings) equals demand for credit (debt).  I don't know where this market determined rate would end up but it most certainly would be higher than it is today.  This would encourage people to save for the things they want rather than buying on credit.  The increased savings generated would be used to finance productive assets rather than consumption and so productivity would improve.  Bottom line is that the ONLY solution to the problem at hand is to develop an honest system of sound money.  This is what was mandated by the US constitution.

The other solution offered several times by Matrix to cancel all debts cannot work.  Why not?  Since under our fiat system Money = Dedt so if you eliminate all debt you also eliminate all money.

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Re: Solutions people...Solutions, The Martin Movement is ...


This is from Peter Schiff.  Scary! 

The Humpty Dumpty Economy

Before the current economic crisis became apparent to all, the most popular fable used to describe America’s uncanny economic resiliency was the story of Goldilocks. It was argued that our economy was skipping down a sunny path of moderate growth, low inflation and rising asset prices. However, a much better parable for our economy over the last decade would have been the story of Humpty Dumpty: a bloated, fragile shell perched on the top of a dangerously high stone wall. This week, all the government’s horses and all of its men scrambled to put Humpty Dumpty back together again. Here is a look at some of this week’s highlights:

The Mother of all Moral Hazards

No doubt prodded by the administration, Fannie Mae and Freddie Mac announced a new attempt to stop the fall in home prices and foreclosures through a loan modification program that would cap mortgage payments so that a homeowner’s total housing expenses would not exceed 38% of household income for home owners who are 90 days delinquent.

In a classic case of unintended consequences, the plan will encourage a massive new round of delinquencies and household income reduction as homeowners will jump through hoops to qualify for the program and maximize their benefit. Those who could conceivably economize to meet their existing obligations will now have a strong reason to forego such sacrifices. Those who are not 90 days past due will intentionally become so. In many cases, dual income families may decide to eliminate one job altogether as reduced mortgage payments combined with lower child care and other work related expenses will likely exceed the after-tax value of the lost paycheck.

Unfortunately, the last thing our economy needs is falling household incomes and even more bad debt. But that is precisely what this plan will give us.

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Re: Financial Crisis Tab Already In The Trillions

<blockquote>Note: 4284.5 billion = $4.2845 trillion. Or a stack of thousand dollar bills 299 miles high. If you were on the space shuttle you'd still have 100 miles of thousand dollar bills towering above your head.</blockquote>

 But the US federal debt is now at $10.65 Trillion. The dollar is going to the moon!

 Its now on its past the orbit of the moon if you stack $1 bills instead of $1000 bills.

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Re: Financial Crisis Tab Already In The Trillions
gyrogearloose wrote:

PV payback. Read the site. It smells to me of selective inclusions/exclusions.

Read http://www.jeffvail.net/2006/11/energy-payback-from-photovoltaics.html

Strangely, total cost seems to do a fairly good job of accounting for all the embedded energy in an item.

No, not with PVs. They are labor and science intensive, made by people in white coats in 99.99% dust free environments etc etc... THAT is where the expense comes from. Our PVs don't have glass, and that alone must represent ~20% of the emergy, but not the cost..... The main reason thin film is cheaper is that Si ingots/crystals are not needed, and it cuts out all thehigh tech manufacturing.

gyrogearloose wrote:

A few years ago a friend was commenting on how much it was going to cost to get power to his house and I told him to go solar/wind. Payback was instant as the off grid ( over-sized compared to what you have ) still cost less than getting grid connection. Even system maintenance and capital replacement allowances are less than the power bill the would have had. Ahead in every direction.

Still a PV sceptic when it comes to replacing grid power if you are right by the grid.

That's all very well, but what will we do when the grid goes down? We have back up power from batteries in the event of a blackout..... so there are other advantages!

gyrogearloose wrote:

Saw an article that claimed the Hummer was greener than a prius Tongue out but here is article does a good job of covering that topic.

http://www.thecarconnection.com/article/1010861_prius-versus-hummer-expl....

I haven't got time right now to search for a link, but that article was soundly rebutted....

gyrogearloose wrote:

Explains fairly well the how many bits are left out of "payback" calculations and how "Fuzzy" the answer can become.

So I contend that a good rule of thumb of payback should be simply the cost ( excluding govt subsidies ).

Companies don't usually "conveniently" leave out the cost of certain aspects of making the item.

Hamish, this the classic error people who do not understand resource depletion make.... We have squandered all types of resources because 'the market' made them really cheap, like gas at 5c a gallon in the early days of motoring in the US. The result was that you guys drove around in 3 ton yank tanks (as we call them here!) that couldn't even do 10 MPG. In Europe, at the same time, we were paying a heap more, and everyone drove around in 40 MPG cars.... of course Europe did not have its own oil. IF the US motorist had had to pay a couple of bucks a gallon instead of 5c, then you would've all been driving around in small cars too, and instead of peaking in 1970, your oil resources might still be viable to this day....

What I'm getting at here is that electricity is also way too cheap. We are currently being offered 44c/kWhr for solar power we feed into the grid, and people are actually objecting because it might increase their bills by $1.50 a month... I mean to say, they MUST BE KIDDING... everyone should be paying 44c, period. Then we wouldn't have climate change issues, etc etc.... but it's all too late now, we've hit limits to growth, and that is that.

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Amorphous Si Triple Junction PV Technology

For the PV skeptics among you who still don't believe there are possibilities of making reasonably sustainable PVs, look here:

 http://www.uni-solar.com/interior.asp?id=67

Then follow the links for more info 

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Re: Financial Crisis Tab Already In The Trillions
Xflies wrote:

Hey Matrix, great to see your insights here... I thought that Gallium was a key component to these new thin-film panels but I guess I was wrong.

Question for you... how do you propose that we just "Cancel the debts"? After coming out with a detailed explanation of how you will do it, consider the implications step by step, that would really help.

Thanks!

You don't want much do you......  I don't have time to write 'detailed explanations', I am busy building a sustainable lifestyle so my family can survive all this crap.

Let me just say this:  we live in unprecedented times, which will need unprecedented solutions.  I know canceling debts is very left field, I'm a left field kindaguy!

What I have found so impressive about Chris' work is that he is the first person I have come across (with perhaps the exception of ME!) who has tied together all the crises we are facing today.  Most everybody else on the net will go on and on about Peak Oil, or Climate Change, or the debt bubble, or the housing crisis, or species extinctions, or......  but Chris mentions them all, even if he barely touches on Climate Change..

It doesn't matter what we do now, it will not be pleasant.  No matter what happens, someone will be seriously pissed off!  As far as I'm concerned, the Elites can all go to hell (via jail).  They caused this, they deserve NOTHING.  In fact I would take EVERYTHING they own off them, and redistribute the wealth (sorry, no detailed info here either!)

If YOU hold stocks, well bully for you, I sold mine a very long time ago when I worked out TS would HTF sooner or later, and I was taking no chances.  I could've actually made a mint if I'd hung on a bit longer, but I have no regrets, my conscience is clear that I wasn't invo;ved in the world's biggest scam....  I don't think I'm cleverer than anybody else, so how come so few people saw this coming? 

I think making a few sacrifices for the sakes of our kids is really no big deal.  Today's society has become selfish beyond all imagination....  and I don't care if you think canceling debts will hurt your back pockets.  Frankly you have far worse things to worry about.

Mike. Just throwing ideas about and letting off steam...

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the beginnings of debt cancelations?

Fannie Mae, Freddie Mac to suspend US home foreclosures

http://www.abc.net.au/news/stories/2008/11/21/2426119.htm?section=justin

Two US mortgage finance giants Fannie Mae and Freddie
Mac said they will halt home foreclosures until early January as they
modify loans to help keep owners in their homes.

The huge firms, which underpin about half of the huge US mortgage
market, said in separate statements that they were suspending the
foreclosures to support a streamlined loan modification program
announced on November 11.

Both Fannie and Freddie said they instruct their loan service firms
to suspend all foreclosure sales and evictions involving occupied
single-family homes beginning next Wednesday.

Freddie's suspension also includes properties with two to four units.

The suspensions will be in effect until January 9, said the ailing shareholder-owned
mortgage giants, which were seized by the US Government in early
September to avoid their collapse amid the escalating global financial
crisis.

The companies have been working with the Government and the private
sector to try to stem the surge in foreclosures following the collapse
of the housing market in 2006 and the related subprime mortgage crisis
that triggered the financial crisis in August 2007.

"The streamlined modification program by Fannie Mae, Freddie Mac,
Hope Now and 27 mortgage servicers is an important step forward in
addressing the systemic issues driving the increase in foreclosures,"
Fannie Mae president and chief executive Herb Allison said in the
statement.

"Until the streamlined modification program is fully implemented, we
felt it was in the best interest of both borrowers and Fannie Mae to
take this extra step to ensure that homeowners with the desire and
ability to prevent a foreclosure have an opportunity to stay in their
homes."

The suspensions will begin the day before the Thanksgiving holiday, which kicks off the year-end holiday season.

- AFP

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the beginnings of debt cancelations?

Steve Keen writes in comments at his blog
http://www.debtdeflation.com/blogs/

..."My feeling is, from the data and my own dynamic modelling, that
this level of debt is simply too great to be overcome by any level of
pump priming while maintaining the current level of prices.

Since I don't have any confidence in the capacity of our economic
managers to engineer inflation, the only solution–and one that could
be combined with setting up a post-crisis financial system–is debt
moratoria. This debt should never have been issued, contributed
nothing to world economic capacity (expensive assets are not more
productive assets), and attempting to get out of the crisis while
still honouring this debt is futile.

But of course widespread moratoria would bankrupt most financial
institutions that weren't already bankrupt, and given securitisation
the pain would spread well beyond the financial sector. So this
remedy is only likely to be contemplated when everything else has
failed, and above all else after the financial system has already
imploded.

The USA is much closer to this situation than we are, so in one sense
they are closer to the possibility of a rescue than we are too. But
even there it will take a couple of years of really bad economic
performance before something as drastic as debt moratoria will be
politically palatable."

http://www.debtdeflation.com/blogs/2008/11/20/has-debt-deflation-begun/

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Re: Financial Crisis Tab Already In The Trillions

I think I need more gold....

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Growthbusters - the Movie

http://www.growthbusters.com/

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Posts: 537
Re: Financial Crisis Tab Already In The Trillions
Damnthematrix wrote:

No, not with PVs. They are labor and science intensive, made by people in white coats in 99.99% dust free environments etc etc... THAT is where the expense comes from. Our PVs don't have glass, and that alone must represent ~20% of the emergy, but not the cost..... The main reason thin film is cheaper is that Si ingots/crystals are not needed, and it cuts out all thehigh tech manufacturing.

This thread getting to long and somewhat off topic, so I starting one in general titled 

Solar PV ERoEI

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