Daily Digest

Daily Digest 9/1 - The Seneca Effect, Recession Generation Waits It Out, Oil And Gas Reality Check 2011

Thursday, September 1, 2011, 9:47 AM
  • The Non-Scenic Route to the Place We’re Going Anyway
  • The Seneca Effect: Why Decline Is Faster Than Growth
  • Witan: why printing even more money can save the world
  • Generation Limbo - Waiting It Out
  • Every Company Is An Energy Company
  • Oil And Gas Reality Check 2011
  • Katia Becomes a Hurricane, but Not Yet a Threat
  • Covered Bridges, Beloved Remnants of Another Era, Were Casualties, Too

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The Non-Scenic Route to the Place We’re Going Anyway (jdargis)

I’m told that the cliché du jour in financial markets involves reference to ‘uncharted territory’. It’s things like the GDP figures which are responsible for that. We’re deep in the land of Rumsfeld’s unknown unknowns. (Why, incidentally, was he so widely mocked for talking about the difference between known and unknown unknowns? It seems to me an immensely useful distinction, not least as a way of describing the difference between what economists call risk, which markets can measure and therefore like, and uncertainty, which they can’t and therefore hate.)

The Seneca Effect: Why Decline Is Faster Than Growth (Robert J.)

Could it be that the Seneca cliff is what we are facing, right now? If that is the case, then we are in trouble. With oil production peaking or set to peak soon, it is hard to think that we are going to see a gentle downward slope of the economy. Rather, we may see a decline so fast that we can only call it "collapse." The symptoms are all there, but how to prove that it is what is really in store for us? It is not enough to quote a Roman philosopher who lived two thousand years ago. We need to understand what factors might lead us to fall much faster than we have been growing so far. For that, we need to make a model and see how the various elements of the economic system may interact with each other to generate collapse.

Witan: why printing even more money can save the world (Michael S.)

Speaking in a video interview with Citywire, Bell says steps such as a third instalment of quantitative easing – essentially printing money to boost asset prices – by the Fed and other ‘enabling mechanisms’ would be aimed at ensuring liquidity already injected into the US economy had a greater effect.

Generation Limbo - Waiting It Out (jdargis)

Amy Klein, who graduated from Harvard in 2007 with a degree in English literature, couldn’t find a job in publishing. At one point, she had applied for an editorial-assistant job at Gourmet magazine. Less than two weeks later, Condé Nast shut down that 68- year-old magazine. “So much for that job application,” said Ms. Klein, now 26.


Every Company Is An Energy Company (PDF, Michael S.)

More examples of the energy-related initiatives undertaken by UPS and other large companies are scattered throughout this paper. They all serve to underscore our basic premise: Every company is an energy company. This might come as a surprise to many of them. But a decade from now, a company without an “energy and sustainability” department could be as unusual as one without a human resources department. Either that, or it might be out of business.

Oil And Gas Reality Check 2011 (PDF, Michael S.)

The issue of accountability is also cascading through the extended value chain. For instance, the Gulf spill and other recent mishaps are also forcing insurance companies to redefine risk and worst-cast scenarios as well as who is ultimately held responsible - the rig operator, the owner, or those who work on blowout preventers.


Katia Becomes a Hurricane, but Not Yet a Threat (jdargis)

As of 11 p.m., Katia was still centered about 1,800 miles (3,000 kilometers) east of the Leeward Islands and was moving west-northwest near 20 mph (32 kph).

Covered Bridges, Beloved Remnants of Another Era, Were Casualties, Too (jdargis)

Vermont officials have found several other covered bridges, among the 100 or so statewide, that have been seriously damaged, but the loss of the Bartonsville bridge, built in 1871, with a wooden lattice spanning 158 feet, was considered the greatest historical blow. (Another badly damaged bridge, in Quechee, was covered but built of concrete in the 1970s.)

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Generation Limbo - Waiting It Out

Generation Limbo - Waiting It Out


But when his parents started charging him $500 a month for rent, he moved into a windowless room in a Baltimore row house and took a $12-an-hour job at a Baltimore call center, making calls for a university, encouraging prospects to go back to school. “There’s no point in being diplomatic: it is horrible,” Mr. Shore said.

Great! More debt.

A more productive idea from "Share or Die"


The Get Lost Generation
If the directions through which productive potential is traditionally realized (traditional careers, families, housing, modes of transportation) are not going to be open to many of us, as the situation indicates they will not, then we will need to produce and construct new ones. “Make it new” is an old phrase but, from one generation to another, it’s still good advice. The original Lost Generation produced its enduring works of art in flophouses and dive bars, not offices or writing workshops. For the modernists, being lost was a precondition for creation, not a barrier. We have no choice but to cease to think of exploration as a bounded time in which we are to “find” ourselves before we are put to work. For many of us, that end may never come. If the roads are closed, getting lost becomes the only way to move. The alternative is stagnation and the bare-life instrumentality of the on-demand labor contract.... We have better things to do with our productive capacities than depress wages for those who cling to traditional employment. Instead, we have the opportunity to create new forms of social organization and patterns of mutual support.

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White House sharply cuts U.S. growth forecast


"The White House acknowledged that the outlook had deteriorated amid sharp financial market turbulence following ratings agency Standard & Poor's downgrade of the AAA U.S. credit rating.

As a result, it offered an alternative economic forecast based on what has happened in recent weeks. This projects GDP growth this year of 1.7 percent, compared with 2.7 percent expected back in February, with 2.6 percent forecast for 2012, down from a 3.6 percent prediction in February."

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
08/19/2011 9,972,502,845,412.93 4,666,736,722,461.45 14,639,239,567,874.38
08/22/2011 9,972,289,792,411.94 4,640,145,705,926.68 14,612,435,498,338.62
08/23/2011 9,973,104,150,361.44 4,676,185,519,986.41 14,649,289,670,347.85
08/24/2011 9,973,599,668,211.01 4,665,507,584,890.10 14,639,107,253,101.11
08/25/2011 9,989,043,750,341.79 4,664,504,136,014.32 14,653,547,886,356.11
08/26/2011 9,990,047,413,541.98 4,663,780,779,375.37 14,653,828,192,917.35
08/29/2011 9,989,974,192,571.08 4,634,818,497,222.78 14,624,792,689,793.86
08/30/2011 9,990,126,772,846.86 4,632,518,164,730.04 14,622,644,937,576.90
08/31/2011 10,024,253,354,407.07 4,660,039,640,336.86 14,684,292,994,743.93
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List of World’s Largest Creditor and Debtor Nations

List of World’s Largest Creditor and Debtor Nations


Since 2006 The International Monetary Fund’s Balance of Payment statistics have been uploaded into a neat online database accessible through its website. Among country balance of payments figures, the database also features the “Net International Investment Position” of a country, which is defined as the difference between foreign assets that domestic residents own and domestic assets held by foreign entities. Here are the most recent (2010) rankings. Note that the 2011 rankings are still in the process of being calculated.

It is no surprise that the most indebted country, the United States, takes the bottom of the list. Its NIIP means the value of its domestically owned assets is less than its liabilities to foreign investors. We see Spain, Greece, Italy, and Portugal on the list of negative NIIPers as well. Japan, China, and Germany are effectively the countries with the largest NIIP. Countries with a positive NIIP are considered to be creditor nations, while those with a negative NIIP are debtor nations. For everyday investors, the NIIP of a country promises to be a leading indicator of a country’s overall fiscal responsibility. Diversifying holdings in both creditor and debtor nations could help spread a portfolio’s risk over time.

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from the lead article above.

from the lead article above.

The fact that the US can print as much of this global reserve currency as it likes is an inestimable economic advantage and gives it more or less unlimited power to borrow money in times of trouble, since it can issue IOUs with one hand and print the currency to pay them off with the other. This is an easy – a very easy – power to abuse by accumulating huge debts, but what caused the downgrade wasn’t America’s debts per se. Instead, it was the Congressional Republicans’ brinkmanship over what should have been the routine raising of the ceiling on the total amount of US debt. The deal on offer to the Republicans was described by the conservative commentator David Brooks as ‘the deal of the century’, offering ‘trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases’:

(emphasis mine)

Really? The savings were mostly illusory, based on (rosy) GDP projections as far as ten years out, and were to a large extent cuts in the rate of growth (as in, "We'll spend more, just not as MUCH more), not true cuts. The "revenue increases" (read: tax increases) were genuine and immediate. It was all about plucking the goose without making it protest, but the geese protested when they hired the bunch in the House.

I'm not saying that I am thrilled with the House Repubs, but David Brooks is not being entirely candid, either. We're screwed no matter what, but at least, Mr. Brooks, get your facts straight.

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From the lead article above

Thank you Safewrite for clarifying that "deal of the century".  Spending cuts are one time.  Tax increases get multiplied by years.


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Nice find Johny oxygen Look

Nice find Johny oxygen

Look where the shining beacon of Western Civilization, Australia is. Who would have thunk? Because of our low population numbers if the graph were per capita it would be even more telling.

No cause for schadenfreud there.

On the other hand who knows what the balance of payments between Dallas and Boston is? It seems to me that the case for World Government is getting stronger.

Safewrite, it might be better if you use the past tense when describing the dollar's reserve currency status.

Ah. Hugo Bardi. From the Oil Drum. He has so much that one can agree on. It is not a situation that I am familiar with. Frankly it makes me uneasy. But there it is. He draws heavily from The Limits to Growth and so my heart melts.

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economics and the imagination.


  One of the books I remember fondly from my childhood is "Mathematics and the Imagination..." - Kasner and Newman.


  ( It coined the term googol (cf - "google"), as well as introducing me to wierd ideas like non-euclidean geometry and topology. )

 One day soon I hope to see a similar book: "Economics and the imagination".

  When I see economics articles talking about numerical money as if it was "real".. like a minute, a kilogram, a Joule.. I want to scream. 

 The numbers seem so seductively concrete. The meaning and significance is utterly variable.

 The map is not the territory. (tm) , equally - The money is not the wealth.

 Economics is where mathematical maps meet physical, personal territory.

 The debate over the debt ceiling.. with republicans applying "common sense" measures to a mathematical money creature... not good.

 The current money system needs it's craziness.. the physical system needs it's sanity..

 Whenever you look at a measure of money.. remember.. it's slippery and meaningless. A $ is not a Kilogram, a Joule, or even a lumen... despite the imagery..


 For as long as the current system holds.. this song will apply...




 Render unto the bernank, what is the bernank's, and give to reality what is real.



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The Road to Reality.

Good post Plato.

Shall I buy the book? I am weakening. Yes, I shall.

I up you The Road to Reality. by Sir Roger Penrose.

He says that a person of moderate intelligence can follow the arguments.

He lies.

I got stuck at the Riemann hypothesis, where they stuck a needle through a number plane from the south pole ,through the number in question, to obtain a position in the skies over the northern hemisphere. I am afraid it all fell apart for me then.

I still have no idea what Reality is.

Neither does he. Which is oddly comforting.

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