Karbon

Tiber

2009-09-03T10:22:00.002-04:00

The amount of hype new oil discoveries receive these days is telling.

BP's latest "giant" oil field discovery "Tiber" is said to contain 3B barrels of oil in place.

Peak Oil debunked. Gas up the hummer. Energy crisis solved.

But consider;

1) 20% of the field is actually recoverable, or 600M barrels. Divide that by 75M barrels a day oil consumption - and you get 8 days supply

2) The field is supposed to be developed in 2015...in the intervening 6 years, the world will have burned 164 Billion barrels of oil, or 273 Tibers. Depletion is relentless, and discoveries are no where close to replacing what we are using

3) The oil is 6 miles below the floor of the Gulf of Mexico in hurricane alley, the easy oil is long gone

4) If this project actually moves forward, it will mean one thing, high oil prices. The cost to develop this field is enormous, mind boggling - only in a high oil price environment would BP consider allocating capital in hope for a return to shareholders.

Next time the media announces a major oil find, take it with a grain of salt

- Rinx

Ben is working overtime

2009-08-21T09:32:00.003-04:00

The Fed created another $50Bil or so last week...what's a few Billion, it doesn't seem like much...but when you stop and think a few key strokes on Ben's cash register equates to the combined enterprise value of Petro Canada and Suncor (roughly), it puts that kind of illegitimate "wealth" creation in perspective...sooner or later the shit will hit the fan...got gold?

- Rinx

Fed Assets Increase 2.3% on Buying of MBS, Treasuries (Update1)

Aug. 20 (Bloomberg) -- The size of the Federal Reserve’s balance sheet rose 2.3 percent as the central bank bought more U.S. Treasuries and mortgage-backed securities.
Fed assets gained $46.2 billion to $2.06 trillion in the week that ended yesterday, the central bank said today in Washington. Holdings of mortgage-backed securities jumped $66.6 billion to $609.5 billion, and the Fed’s portfolio of U.S. Treasury securities increased $7.1 billion to $736.1 billion.

U.S. central bankers kept the benchmark lending rate in a range of zero to 0.25 percent at their Aug. 12 meeting and extended a $300 billion Treasury purchase program until the end of October. The Fed said economic activity is “leveling out,” and conditions in financial markets have “improved further.”

Chairman Ben S. Bernanke has flooded the banking system with reserves, providing billions in financing and liquidity for banks, and the commercial paper, asset-backed securities and mortgage-backed securities markets. Fed officials are studying the tools needed to roll back monetary expansion.

Credit extended through the Fed’s Term Auction Facility, a mechanism to provide greater distribution of reserves to commercial banks, declined by $12.5 billion to $221.1 billion.
Discount-window lending to commercial banks stood at $29.9 billion yesterday versus $38 billion the previous week. Commercial paper held by the Fed under an emergency program begun in October fell to $49.5 billion from $53.8 billion

Czars

2009-08-15T19:15:00.002-04:00

It seems you can't swing a dead cat in Washington anymore without pelting a "czar" of some sort or another. They have a "car czar", "bank czar", "pay czar" among many others.

Used to be a czar was some disingenuous Russina oligarch from a century ago. Somehow Obama has resurrected the term, cleaned it up, and appointed modern day "czars" rulers of industry. Washington media seems to like the term, maybe this is the royalty they have always been envious of.

Wasn't too long ago entrepeneurs were celebrated leaders of American industry.

Elite government rule is a cancer to prosperity, is there a better reason to be short America?

- Rinx

Underwater’ Mortgages to Hit 48%

2009-08-06T07:27:00.002-04:00

If these numbers are anywhere near correct, the US banking system will continue to bleed red ink...when this current stock market rally peters out, look out for another major leg down in the markets.

- Rinx

‘Underwater’ Mortgages to Hit 48%, Deutsche Bank Says

By Jody ShennAugust 5, 2009 15:32 EDTAug. 5 (Bloomberg) --

Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.

The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today.

As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank. Further deterioration will depress consumer spending and boost defaults by borrowers who face unemployment, divorce, disability or other financial challenges, the securitization analysts said.

“Borrowers may also ‘ruthlessly’ or strategically default even without such life events,” they wrote.

Seven markets in states with the fastest appreciation during the five-year housing boom -- including Fort Lauderdale and Miami, Florida; Merced and Modesto, California; and Las Vegas -- may find 90 percent of borrowers underwater, according to the report.

The share of borrowers owing more than 125 percent of their property’s value will increase to 28 percent from 13 percent, according to Weaver and Shen.Home prices will decline another 14 percent on average, the analysts wrote.

Where is the Price of Oil Headed?

2009-07-23T10:26:00.002-04:00

According to this research just released by BMO Nesbitt Burns it ain't headed back down to $30 anytime soon. High operating costs beget high oil prices.

- Rinx

2008 Break even price for oil & gas: US$87.24-BMO Nesbitt

Posted by Keith Schaefer on July 22, 2009

The breakeven price for oil and gas companies in 2008 was US$87.24 per barrel of oil equivalent (boe), BMO Nesbitt Burns said in their annual Global Cost Study released July 21. The three year average for the industry’s breakeven price is US$73.60. They estimate the 2009 breakeven price will fall roughly 20% to close to US$70. It has risen steadily since 1999 when it was $16.96BMO Nesbitt Burns is one of the largest Canadian brokerage firms. Their survey included 118 companies that produced 19 million barrels of oil per day (bopd) and 85 billion cubic feet of gas per day (bcf/d).

These numbers encompass all costs, or what the industry calls full cycle costs, and include a 10% return on capital for the producer.(This is an important distinction as many investors get confused on costs. When companies report break-even costs on wells or production, they are often referring to operating costs, or what the industry calls half-cycle costs. Energy companies can say they can produce oil or gas at $X, but that may be on an operating basis, and not include items like land acquisition (this is especially true for the new shale gas plays).)BMO says the rise in the breakeven price is caused by two factors:1) Operating costs have gone from US$4.50 per boe in 1999 to almost $16 in 20082) Rising Finding & Development Costs (F&D). This is the big jump - from US$3.88 in 1999 to $23.16 in 2008.

This is the cost for replacing reserves. If a company has 10 million boe in reserves in Year 1, but produced 1 million boe that year, it now only has 9 million boe in reserves. The cost of replenishing that 1 million boe lost to production has increased dramatically.

I’ll highlight several points that I think investors would find interesting:F&D costs in 2008 rose 56%, a huge jump. BMO said this was because many companies actually showed negative reserve growth in 2008, despite $323 billion being spent on exploration by these 118 companies.This is because costs were still reflecting the highly inflated cost structure of 2005-2008, while the year end oil price collapsed. Companies must report their reserves based on the year end oil price. They spent their exploration money throughout the year finding oil reserves based on $100 oil, but it ended up just over $44.

In North America, BMO reports reserve additions cost more than US$41/boe, almost double their global average. (However, North American accounting provisions could just be tougher - but I’m not sure about that.)Return on capital for energy producers has decreased since 2005, as government have taken a larger chunk of the profits, and the quality of crude has declined. So profit per barrel has declined and the cost of finding a barrel has increased, despite over $1.2 trillion spent on exploration in the last five years, BMO reports.

There are a couple issues that would indicate higher oil prices are here to stay:-historically, there is still a small surplus capacity in the global system, even with the global recession. BMO’s charts show it to be under 5 million boe, vs. over 20 million in the 1980s and early 1990s.-a shortage in skilled labour within the industry remains - geologists, engineers etc.BMO also reports that previously when there was surplus capacity, the industry was also able to discover large low cost reserves in the world that helped bring costs down. They don’t see that on the horizon right now.

The oil sands, a new unconventional source of oil, might be able to get to all in cost of US$50.They do point to shale gas as one such possibility. Natural gas could potentially find a breakeven price of US$5/mcf, down from $9.28. However, I have written before how the financial statements of these companies are not yet showing any significant decrease in their finding costs, as is shown on the line item “Depreciation, Depletion & Acquisition”, or DD&A.

Lastly, and this is important for the many thousands of retail investors who own the Canadian natural gas stocks, is that costs to find gas in Canada is 50% higher than in the US - >US$10/mcf vs. US$7.09. The reason for this is that Canadian companies built up production as fast as they could over the last few years, with the hopes of being bought out by a royalty trust, and that game is now gone, or much reduced.The Canadian producers just did not need to be as efficient in their growth as their US counterparts. (Having said that, their success rate in drilling is still very high.) But this has resulted in high debt levels for the Canadian companies during a time of low commodity prices. Much if not all of their cash flow growth over the coming years will be used to reduce debt, and will not flow to investors. This means investors need to be very choosy in deciding which if any gas weighted juniors or intermediate producers.

Pope calls for a "global authority" on economy

2009-07-08T08:23:00.002-04:00

The idea of a unified world government, redistribution of wealth, one central bank, etc., once was discussed in secret bilderberg meetings, or whispered among the Rothchilds and Rockefeller's and their ilk.

Now the "New world order" is openly discussed - by the Pope no less. It's no surprise the Vatican Banksters are involved.

The greed at this level is insatiable, I'm afraid they will stop nothing short of total control of the global economy and population. It was written more than a century ago, and today we are witnessing implementation.

-Rinx

The Great Global Warming Swindle

2009-07-07T22:39:00.002-04:00

http://video.google.com/videoplay?docid=288952680655100870

- Rinx

Atlas Shrugging

2009-03-19T09:06:00.002-04:00

I recently plowed through 1200 pages of Ayn Rand's classic - Atlas Shrugged. Have to say it was one of the better reads if not the best. Parallels to today's socio, political and economic environment that Rand wrote about 50 years ago are striking.

Looks like I am not the only one discovering this classic as this interview suggests http://www.pjtv.com/video/PJTV_Daily/Is_Atlas_Shrugging%3F/1530/;jsessionid=abcwLXV6TxUNM7v1Ipras

- Rinx

Today an Ounce of Gold Costs...

2009-02-20T12:13:00.001-05:00

One "Grover"

- Rinx

US Bankrupt

2009-02-20T08:35:00.001-05:00

or at least according to our new favourite economic YouTube reporter.

caution: Foul language!

http://www.youtube.com/watch?v=DxPcJyypUKc

Classic Rick Santelli - Telling it Like it is

2009-02-19T12:34:00.000-05:00

http://www.cnbc.com/id/15840232?video=1039849853

- rinx

Eastern Europe is about to Blow

2009-02-17T16:34:00.002-05:00

I wonder if this is the reason for the parabolic move in Gold today? It's not hard to imagine we are teetering on the edge of the dark interregnum

- Rinx

Written by Mike Whitney February 17, 2009

"ICH" -- -Eastern Europe is about to blow. If it does, it could take much of the EU with it. It's an emergency situation but there are no easy solutions. The IMF doesn't have the resources for a bailout of this size and the recession is spreading faster than relief efforts can be organized. Finance ministers and central bankers are running in circles trying to put out one fire after another. Its only a matter of time before they are overtaken by events. If one country is allowed to default, the dominoes could begin to tumble through the whole region. This could trigger dramatic changes in the political landscape. The rise of fascism is no longer out of the question.

The UK Telegraph's economics editor Edmund Conway sums it up like this:

"A 'second wave' of countries will fall victim to the economic crisis and face being bailed out by the International Monetary Fund, its chief warned at the G7 summit in Rome....But with some countries' economies effectively dwarfed by the size of their banking sector and its financial liabilities, there are fears they could fall victim to balance of payments and currency crises, much as Iceland did before receiving emergency assistance from the IMF last year." (UK Telegraph)

Foreign capital is fleeing at an alarming rate; nearly two-thirds gone in matter of months. Deflation is pushing down asset prices, increasing unemployment, and compounding the debt-burden of financial institutions. It's the same everywhere. The economies are being hollowed out and stripped of capital. Ukraine is teetering on the brink of bankruptcy. Poland, Latvia, Lithuania, Hungary have all slipped into a low-grade depression. The countries that followed Washington's economic regimen have suffered the most. They bet that debt-fueled growth and exports would lead to prosperity. That dream has been shattered. They haven't developed their consumer markets, so demand is weak. Capital is scarce and businesses are being forced to deleverage to avoid default. All of Eastern Europe has gotten a margin call. They need extra funds to cover the falling value of their equity. They need a lifeline from the IMF or their economies will continue to crumble.

The UK Telegraph's economics correspondent Ambrose Evans-Pritchard has written a series of articles about Eastern Europe. In "Failure to save East Europe will lead to Worldwide meltdown" he says:

"Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc....

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data). (Ambrose Evans-Pritchard UK Telegraph)An economic crisis is quickly turning into a political crisis.

Riots have broken out in capitals across Eastern Europe. Mr. Geithner had better be paying attention. The prospects for political upheaval are growing. Public anxiety can spill out onto the streets at a moments notice. Governments must act quickly and with resolve. These countries need hard currency and guarantees of support. If they don't get help, the simmering public fury will turn into something much more lethal.

UK Telegraph's economics correspondent Ambrose Evans-Pritchard:

"Global banks have so far written down half the $2,200bn losses estimated by the IMF. On top of this, EU banks have $1,600bn of exposure to Eastern Europe -- increasingly viewed as Europe’s subprime debacle, and EU corporate debts are 95pc of GDP compared to 50pc in the US, a mounting concern as default rates surge.

“It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems. Such considerations are particularly important in the current context of widening budget deficits, rising public debt levels and challenges in sovereign bond issuance." (UK Telegraph)

It's the same wherever banks merged their commercial and investment branches. Debt has skyrocketed to unsustainable levels destabilizing the entire economy. The banks have been operating like hedge funds, concealing their activities on off-balance sheets operations and maximizing their leverage through opaque debt-instruments. Now the global economy is caught in the downdraft of a collapsing speculative bubble. East Europe has been hit hard, but it's just the first of many bowling pins that will fall. All of Europe has been infected by the same virus which originated on Wall Street. Monday's New York Times summarizes developments in the EU:

"Europe sank even deeper into recession than the United States in the closing months of last year, according to figures published Friday...The economy of the 16 countries sharing the euro currency declined by 1.5 percent in the fourth quarter, (an annualized drop of roughly 6 percent) according to the European Union's statistics office. That is even worse than the 1 percent decline in the United States economy during that period, compared with the previous quarter.

“Today’s data wipes out any illusion that the euro zone is getting off lightly in this global downturn,” said Jörg Radeke, an economist at the Center for Economics and Business Research in London. ("Europe Slump Deeper than Expected" New york Times)

The "liquidationists" would like to see governments cut off the flow of funds to ailing financial institutions and let them fail by themselves. It's Darwinian madness, like waiting out a heart attack on the kitchen floor instead of rushing to the hospital for emergency care. The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history. This is no time to cling to half-baked ideology. The global economy is undergoing a massive system-wide contraction which could spin out of control and plunge us into another world war. Political leaders need to grasp the urgency of the moment and keep the vehicle from careening into the ditch.

The American Oligarchy

2009-02-15T19:01:00.003-05:00

A must watch PBS video on US Banks. Some of the best thought out solutions to the economic crisis I have heard. This is a benchmark to judge Geitner.

http://www.pbs.org/moyers/journal/02132009/watch.html

- Rinx

Four Bad Bear Markets

2009-02-14T08:56:00.003-05:00

click for larger view

- rinx

'This is the worst recession for over 100 years'

2009-02-12T09:20:00.003-05:00

Ed Balls, the PM's closest ally, warns that downturn is ferocious and says impact will last 15 years

By Nigel Morris, Deputy Political Editor, and Sean O'Grady, Economics Editor
Tuesday, 10 February 2009

Britain is facing its worst financial crisis for more than a century, surpassing even the Great Depression of the 1930s, one of Gordon Brown's most senior ministers and confidants has admitted.

In an extraordinary admission about the severity of the economic downturn, Ed Balls even predicted that its effects would still be felt 15 years from now. The Schools Secretary's comments carry added weight because he is a former chief economic adviser to the Treasury and regarded as one of the Prime Ministers's closest allies.

Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."

He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible".

The minister stunned his audience at a Labour conference in Yorkshire by forecasting that times could be tougher than in the depression of the 1930s, when male unemployment in some cities reached 70 per cent. He also appeared to hint that the recession could play into the hands of the far right.

"The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years," Mr Balls said. "These are seismic events that are going to change the political landscape. I think this is a financial crisis more extreme and more serious than that of the 1930s, and we all remember how the politics of that era were shaped by the economy."

Philip Hammond, the shadow Chief Secretary to the Treasury, said Mr Balls's predictions were "a staggering and very worrying admission from a cabinet minister and Gordon Brown's closest ally in the Treasury over the past 10 years". He added: "We are being told that not only are we facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict."

The minister's comments came as the Chancellor, Alistair Darling, admitted the global economy was "seeing the most difficult economic conditions for generations". Writing in today's Independent, Mr Darling said his plans for shoring up Britain's finances included "measures to insure against extreme losses" as well as separating out impaired assets into a "parallel financial vehicle". Unemployment figures out tomorrow are expected to show the number of people out of work has passed two million. The Bank of England's quarterly inflation report, also released tomorrow, is expected to include a gloomy forecast for economic growth.

Yesterday, the Financial Services Authority warned that the recession "may be deeper and more prolonged than expected", adding that the global financial system had "suffered its greatest crisis in more than 70 years".

Speaking to Labour activists in Sheffield, Mr Balls conceded that the Government must share some of the blame because it had failed properly to control the banks. But he accused the Tories of blocking Labour's attempts to tighten financial rules.

He said: "People are quite right to say that financial regulation wasn't tough enough in Britain and around the world, that regulators misunderstood and did not see the nature of the risks of the dangers being run in our financial institutions – absolutely right."

The other great depressions
*Long Depression, 1873–96

Precipitated by the "panic of 1873" crisis on Wall Street and a severe outbreak of equine flu (Karl Benz's first automobile did not chug on to the scene until 1886), it was remarkable for its longevity as well as its global reach. In Britain, it was the rural south rather than the rich cities of the north that suffered. The UK ceased to be a nation that relied in any way on farming for its livelihood.

*Great Depression, 1930s
The "Hungry Thirties" were rough on many, at a time when welfare systems were rudimentary. The worst period was from the Wall Street Crash of 1929 to about 1932, but in places such as Jarrow, the unemployment rate hardly dipped below 50 per cent until the economy was mobilised in 1940. However, for many in the south and for the middle classes, the times were relatively prosperous.

Call Me A Cynic

2009-02-10T13:21:00.002-05:00

but do you ever think the timing of "news" is used to push an agenda?

Case in point, a "global warming" study was released today proving the collateral affects of global warming. Yes, the "Audobon Society" released a report stating the Purple Finch bird habitat is expanding northward. These poor critters are now being spotted by bird watchers in Milwuakee Wisconsin...a full 45 miles north of the limit just 40 years ago. What horseshit.

And the report was released for news consumption when the majority of eastern NA is finally enjoying the first break from icy temps the last 6 weeks....why didn't they release this last week when the same regions were freezing their collective asses off?

We can't have folks calling into question the truth about global warming, can we?

Fact is, we are probably closer to global cooling than global warming...sun spot activity is near a century low...polar ice caps are now in full advance. Think Al Gore will tell you that?

-Rinx

Can Countries Really Go Bankrupt?

2009-02-03T14:46:00.001-05:00

By SPIEGEL Staff

The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?

"There's a rumor going around that states cannot go bankrupt," German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. "This rumor is not true."

more
http://www.spiegel.de/international/world/0,1518,604523,00.html

Fed has Printing Press at the Ready

2009-01-28T16:18:00.005-05:00

The Fed is “prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets,” the Federal Open Market Committee said in a statement after meeting in Washington.

Hey, and why not, printing money is quite profitable, where can I get me a business like that?

The US Treasury is going to issue so many Treasuries to pay for their stimulus programs, TARPs and other Alphabet soup programs it will overwhelm private party interest. So rather than allow interest rates to rise to try and attract more private purchases, the Fed will PRINT money and buy the Treasuries for themselves. And collect interest from American taxpayers. Let's not forget, the FED is a Private Bank.

No wonder their leader is so free with cash...it costs nothing to make, and they collect interest on every dollar they drop!

The Looting of America - J6P Awakens!

2009-01-25T15:15:00.004-05:00

This is funny as hell (if you can stand the foul language!)...but indicative the Public is starting to push back hard against bankster gangsters...civil unrest coming to street corner near you?

http://dailybail.com/home/2009/1/25/there-are-no-words-to-describe-the-following.html

- Rinx

Deflating Bank Values

2009-01-24T10:43:00.003-05:00

click image for larger view

and Canadian Banks are not immune..ala Royal Bank of Canada yesterday

- Rinx

Gold Keeping the Printing Press Boyz Honest

2009-01-23T13:59:00.006-05:00

Slider On The Black post on SI today

Fiatgeddon...

Gold hits record highs in Euro & Sterling terms...http://www.reuters.com/article/marketsNews/idAFLN4501620090123?rpc=44The

Chinese want to de-value (as does EVERYONE else)...http://in.reuters.com/article/domesticNews/idINSP35192620090123

Trillions in global currencies being created out of thin airto prime the economic pump, as Central Banks all head towardZIRP and/or quantitative easing...http://online.wsj.com/article/BT-CO-20090121-710489.html

It's no longer about... "got Gold?" It's now about..."How much Gold you got?!?!"

Fasten your seat belts people & enjoy the ride!

Mo later,
S.O.T.B.

Another Leg Down?

2009-01-23T08:58:00.003-05:00

Per previous blog entry, China's Q4 growth came in at 6.5%, BUT, given they report quarterly numbers using a trailing 12 month average, the sharp drop indicates actual growth was zero, or negative.

This is a bit of a shock to conventional market wisdom, yes China (and India) were expected to slow markedly but few thought they would also be in recession. The ramifications of a unified global recession are enormous, and this new reality shifts all expectations for recovery downward.

If China is worse off then thought, expect them to spend their savings stimulating their own economy! Good God, why should the US expect them to continue to buy their debt issues to finance their stimulus program? Chimerica is dead! Did you hear Gheitner's comments on China this morning, careful Tim don't bite the hand that feeds you (what a chump...how can a tax cheat be nominated as US Treasurer...oh I forgot, the illuminati said it shall be, make no mistake about it)

So, who then is going to buy all the US bonds used to finance the $3Trillion 2009 US deficit?
Answer: US Federal Bank (via printing press)

And, we enter the Dark Interregnum...

- Rinx

More Deflation News....nosedive in China

2009-01-22T10:51:00.004-05:00

http://www.ft.com/cms/bfba2c48-5588-11dc-b971-0000779fd2ac.html?_i_referralObject=1008210693&fromSearch=n

- Rinx

Oil Sands on the Brink

2009-01-20T09:09:00.005-05:00

The venerable Canadian oil sands miner, Suncor, just released Q4 results and recorded a $200M+ loss for the quarter. Production costs were $41/Bbl (ouch)

What does that say for the balance of the industry in this low oil price environment? And pass the goat horns to the Alta Govt for jacking royalties and driving another stake into the heart of the industry...talk about killing the goose that lays the golden egg

The US government is printing money like mad (actually quantitative easing, ... "printing money like mad" scares the hell out of people)...and the $USD continues to appreciate.

It's quite a paradox, the USD theoretically has infinite supply (it's just paper and pixels) and rallies...and Oil, a finite resource that is depleting at 9%+/yr according to the IEA, is under the heel of the USD jackboot...this is a trend that HAS to reverse at some point...but the old adage is true...the market can remain irrational longer than one can remain solvent.

- Rinx

What Does Deflation Look Like?

2009-01-19T13:44:00.005-05:00

Nissan's factory test track. Apparently they have run out of room to store vehicles for lack of sales and overflowing dealer lots.

Also

Lower vehicle prices coming to a dealer near you. Count on it.

- Rinx

I Want My Bailout Money!

2009-01-19T12:50:00.000-05:00

http://www.youtube.com/watch?v=dnT21hmlT4o

One Day the String will Snap

2009-01-19T08:06:00.001-05:00

US Q1 Deficit

2009-01-14T09:19:00.002-05:00

$485 Billion = US deficit in the FIRST QUARTER...that's > $150,000,000 per month...or $5.5Billion per DAY!?!

A $2Trillion dollar Deficit for the current FY is baked in the cake...in fact this is before the near $1Trillion "stimulus" package being prepared by the Obama team...and does not take into account the fact the US economy is accelerating to the downside...less tax revenue, higher social program payments. A $3 Trillion deficit for this FY is a high probability.

Question I have....who the hell is going to buy all this new debt??? The Chinese? don't count on it, they have their own set of issues due to the US slow down. This year will severely test the great Chimerica symbiosis that has kept the credit bubble blowing since 2002.

The other Question I have...IF the US finds a buyer for this new debt...where is the capital going to come from to invest in the next generation of companies and ideas that will pull the global economy out of this deflationary death spiral. The US is giant sucking machine that is inhaling vast quantities of precious capital....that ultimately will be squandered.

And I just checked the US Dollar index...and it's rallying against all currencies. UFB. US Treasuries will be the greatest bubble of them all...and it will blow up just like every other bubble in recorded history.

And the pin that pricks the bubble...what will it be? When the rest of the world finally says no to purchasing US debt, or can't afford it, or both. The ONLY recourse left is to print money out of thin air...and the house comes tumbling down.

- Rinx

Nortel - BK

2009-01-14T09:06:00.003-05:00

Nortel just announced they are filing for bankruptcy...the end of the Canadian tech behemoth, and the final chapter in a storied run. At one point in the gogo tech boom of the late 90's, Nortel's market cap was close to half trillion and that value represented 38% of the entire market cap of the TSX. Nortel burned a wide hole in many Canadian investor pockets and destroyed billions in capital.

See ya.

Nortel and all companies with broken business models need to be left alone and let die. This artificial rescuscitation of broken companies is the exact wrong antidote. Throwing good money after bad has never been a good idea...case in point GM announced yesterday (in a quiet soft shoe manner) that the current allocation of bail out money will probably not be enough. Surprise, surprise, surprise.

- Rinx

MIA

2009-01-04T18:16:00.002-05:00

Wow, it's January 4th and my last blog entry was back mid-October....so much has transpired...where have I been??

New Year's resolution...post often...don't care so much about quality of content...no one is smart day in/day out.

Post your thoughts for the day, often what I'm thinking I read about later and say oh shit, it's hardly original content so why bother blogging.

New Year's prognostication...Inflation is a POS prediction, Deflation rules in '09. Cash is king. Damn, that's hard to write, it goes against my prevailing thoughts for most of '08.

Stay lucid, don't marry an opinion. Message to self, read previous sentence. Often.

Carpe Diem!
Rinx

A Picture is Worth A Thousand Words

2008-10-14T18:50:00.004-04:00

Wall Street Bail-out Rejected

2008-09-29T15:56:00.003-04:00

This picture kinda sums up voter sentiment...politicans listened for a change.

Meet Sarah Palin

2008-09-04T08:59:00.003-04:00

My Comment:

Sarah Palin made history last night, and her VP acceptance speech was great theatre.

I had to laugh at her one liner citing the only difference between Pitbulls and Hockey Moms -- Lip stick...probably because I know a few (hockey moms).

Judging by the torrid response below from my favourite left winger, James Kunstler, this Presidential race will be one for the ages.

And for Palin's daughter's boyfriend...I think by the end of this presidential race he will have feverently wished he paid attention in sex ed class.

- Rinx

The Patriot Game - Wednesday

The odious soap opera in Minneapolis gets worse each night, this one like a Sandra Bullock movie produced and directed by the Devil. I tuned in for Rudolf Giuliani's keynote speech, a hyperthyroid exercise in oratorical thuggery, which led directly to the main event, Sarah Palin's acceptance of the vice-presidential nomination.

She quickly proved to be a confident podium performer, but the content and tenor of her remarks conveyed all the petty viciousness and insecurity of the Republican right-wing. As she spoke, the cameras panned around her rapt audience, affording snapshots of the dumbest white people in America, self-congratulatory in their small-town ignorance and brined in a dangerous jingo-patriotism that must make leaders in other nations cringe in amazement at the rhetorical recklessness being served up. Everything about her speech was small-minded, vindictive, smugly sarcastic, and shot through with falsehood (e.g. that the Republicans will "lead America to energy independence"). You wonder how much kool-aid these people have to drink to believe their own bullshit. In fact, watching Ms. Palin's performance, two notions came to mind and lodged there firmly: 1.) That the Republican Party has itself become a vector of terrorism, and 2.) that these are exactly the people I had in mind when I conceived the term "corn-pone Nazis" to describe the worst outcome of an over-stressed society.

In the aftermath, with the whole Palin family bathed in cheering before a giant televised waving flag, the true ethos of this phony spectacle revealed itself: this is the party of losers, and Sarah is their cheerleader. Deep down, Americans feel like losers. Our economy is cratering in an abyss of greed and foolishness. We're exhausting our resources in imperial military adventures. And we're stuck in a car-dependent living arrangement with no future. This bunch doesn't want to face the reality in any of this. They just want to "drill drill drill" so they can keep snowmobiling and rack up more credit card purchases of Chinese-manufactured salad shooters in the WalMart.

Here's an interesting question: if they win the election, will Sarah Palin and her whole family move to Washington when she takes up her duties? What will her husband do there? Who will take care of her "special needs" baby while the mother is learning how to become commander-in-chief of the armed forces and guardian of a nuclear arsenal (plus presiding over the senate)? Will daughter Bristol stay home in Alaska with her teenage husband and their new baby?

Tonight is the climax of this awful spectacle. John McCain gets to explain why the party that wrecked America deserves another term running things in the in the nation's capital.

Iraq, China Agree to Restore Saddam Hussein-Era Oil Deal

2008-08-28T11:53:00.004-04:00

My Comment:

I wonder how this news is being received by Dick Cheney? The first post Saddam oil contract is awarded to the Chinese, and to a firm that is a rival to Dick's Halliburton.

Payback is a bitch.

- Rinx

Iraq, China Agree to Restore Saddam Hussein-Era Oil Deal
Associated Press
August 28, 2008 5:00 a.m.

SHANGHAI -- China and Iraq have signed a $3 billion deal revising an earlier agreement for China's biggest oil company to help develop the Ahdab oil field, according to a statement from the Iraqi Embassy in Beijing.

The deal, restoring a project canceled after the 2003 U.S.-led invasion of Iraq, was signed late Wednesday by Chinese officials and Iraqi Oil Minister Hussain al-Shahristani.

The revised terms of the deal increase the anticipated output from the billion-barrel field to 110,000 barrels per day from the originally planned 90,000 barrels per day, the statement said. The contract is to run for 20 years after production begins three years from now, it said.

Saddam Hussein's regime defied United Nations sanctions that limited direct foreign dealings with Iraq's oil industry and signed a deal in 1997 with the state-owned China National Petroleum Corp.

That contract, worth $1.2 billion at the time, gave a subsidiary of the Chinese company concessions to develop the field on a production-sharing basis for 22 years. The value for the renegotiated contract is $3 billion, the statement said.

The new agreement will be a service contract, under which China won't be a partner in profits and instead will be paid for its work. A spokesman for CNPC, Liu Weijiang, said Thursday that he couldn't provide any information on the deal.

Once the contract is signed, it will be the first Saddam Hussein-era oil deal to be honored by the new Iraqi government. A number of companies say they signed deals with Mr. Hussein's regime and demand that those be honored, or the countries involved be given priority on new agreements. But the Iraqi statement said that some technical services contracts with other big petroleum companies might be postponed.

The ministry has consistently denied giving any advantage to companies with which Mr. Hussein signed deals, instead insisting that oil and gas fields and exploration blocks will be offered up for bids. Iraq sits on more than 115 billion barrels of oil, but decades of wars, U.N. sanctions, violence and sabotage have battered its oil industry.

The Ahdab field is located in Shiite-dominated Wasit province, about 100 miles southeast of Baghdad. It has been the scene of sporadic attacks since the U.S.-led invasion in 2003.

As security improves, Iraq is trying to bring in foreign companies to help increase crude output from the current 2.5 million barrels a day to 3 million barrels a day by the end of 2008, and 4.5 million barrels a day by the end of 2013.

Poland risks attack because of US missiles

2008-08-15T10:36:00.004-04:00

My Comment:

Georgia, now this...anyone who doesn't think the cold war is back on - raise their hand. I wonder if Putin will shut off Nat Gas to Poland this winter? One think for certain, Putin plays for keeps.

- Rinx

By JIM HEINTZ, Associated Press Writer

MOSCOW – A top Russian general said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.

The statement by Gen. Anatoly Nogovitsyn is the strongest threat that Russia has issued against the plans to put missile defense elements in former Soviet satellite nations.

Poland and the United States on Thursday signed a deal for Poland to accept a missile interceptor base as part of a system the United States says is aimed at blocking attacks by rogue nations. Moscow, however, feels it is aimed at Russia's missile force.

"Poland, by deploying (the system) is exposing itself to a strike — 100 percent," Nogovitsyn, the deputy chief of staff, was quoted as saying.

He added, in clear reference to the agreement, that Russia's military doctrine sanctions the use of nuclear weapons "against the allies of countries having nuclear weapons if they in some way help them." Nogovitsyn that would include elements of strategic deterrence systems, he said, according to Interfax.

At a news conference earlier Friday, Nogovitsyn had reiterated Russia's frequently stated warning that placing missile-defense elements in Poland and the Czech Republic would bring an unspecified military response. But his subsequent reported statement substantially stepped up a war of words.

U.S. officials have said the timing of the deal was not meant to antagonize Russian leaders at a time when relations already are strained over the recent fighting between Russia and Georgia over the separatist Georgian region of South Ossetia. (Rinx...yeah right)

Russian forces went deep into Georgia in the fighting, raising wide concerns that Russia could be seeking to occupy parts of its small, pro-U.S. neighbor, which has vigorously lobbied to join NATO, or even to force its government to collapse.

Under the agreement that Warsaw and Washington reached Thursday, Poland will accept an American missile interceptor base.

"We have crossed the Rubicon," Polish Prime Minister Donald Tusk said, referring to U.S. consent to Poland's demands after more than 18 months of negotiations.

Washington says the planned system, which is not yet operational, is needed to protect the U.S. and Europe from possible attacks by missile-armed "rogue states" like Iran. The Kremlin, however, feels it is aimed at Russia's missile force and warns it will worsen tensions.

In an interview on Poland's news channel TVN24, Tusk said the United States agreed to help augment Poland's defenses with Patriot missiles in exchange for placing 10 missile defense interceptors in the Eastern European country.

He said the deal also includes a "mutual commitment" between the two nations to come to each other's assistance "in case of trouble."

That clause appeared to be a direct reference to Russia.

Poland has all along been guided by fears of a newly resurgent Russia, an anxiety that has intensified with Russia's offensive in Georgia. In past days, Polish leaders said that fighting justified Poland's demands that it get additional security guarantees from Washington in exchange for allowing the anti-missile base on its soil.

Oil Seen Dropping Under $90 by Year End

2008-08-15T07:07:00.003-04:00

My Comment:

I am a self confessed Oil bull , but always like to hear what folks sitting on the other end of my trades are thinking...to keep my enthusiasm (and asset allocation) in check.

Their call on price may be correct...who knows short term where the price of anything is headed.

What rankles my nose is their assertion the World is well supplied with oil - and will be so 30 years into the future. And this supply side growth will be the driver for low oil prices over the long term. Two comments, maybe three...

- A significant sustained drop in the price of oil will dramatically raise demand...wiping out any supply side growth

- Look who controls the price of oil. If oil drops, exporters (OPEC) will take oil off the market..they already are talking about a cutback in production with Oil at $115

- And look where new supply is coming from...Oil Sands & Deep Sea Oil (the recently discovered Tupi field off Brazil is 400Km offshore, resting 7Km beneath the ocean floor, in 3Km deep water...and resting under a 2Km dome of salt). These new sources of supply are important, but simply uneconomic at $50, 0r $75 for that matter.

- And, And....geesh

- Rinx

First Global also sees it falling to $50 within 12 months.

First Global
OIL AT $30-$50 A BARREL?

We don't know about you, but this wouldn't surprise us at all. Our Quant side flagged the move in crude oil prices on May 30. They were, as nearly always, right on the money. And now it's time for the data crunchers like us to get into action. It is our firm belief that crude oil represents a true bubble. The tests of a true bubble are that it should have little connection with fundamental data; that the bubble's very existence should create ample nonsensical stories as to why the bubble is for real, and that it will last and last. Crude oil meets the test quite handsomely.

As is clear, there is hardly any correlation between annual changes in demand and the price of oil. If demand increases and the price of oil increases, then we all sit there and draw up spurious correlations between the two. Fact is, there is virtually no consistent finding on "higher consumption leading to higher prices" theory.

Second, and perhaps even more damning is this statistic on the long-term demand and consumption-growth trends of crude oil. As is clear, the long-term demand growth has been in a fairly tight cluster. Through booms and busts. So what is so different now, one might ask? Nothing. The world pretty much continued consuming at the same/similar rate of growth the last five years, as it has for the previous 20.

OK, 27 basis points higher than the 20-year compounded annual growth rate! No, it was the supply, stupid: That's what the other comeback punch from the oil-at-$200 camp is: That's where the problem lies. This is an even bigger load of rubbish. The world is well supplied in oil. And it does not take a genius to figure out that no matter what, the world will definitely add to its reserves over the course of the next 10, 20 and 30 years.

The bull case for oil rested on insatiable supply from China and India, and dwindling reserves. Both are patently wrong. China and India, combined, simply can't make up for consumption slowdowns from the rest of the world, especially the U.S., Eurozone and Japan. And there is plenty of anecdotal evidence to suggest that even the Chinese demand is exaggerated because China has overbought for the Olympics. The world has fairly comfortable reserves. And there is frenetic discovery exploration in Russia, Brazil, India, Iran and elsewhere. So, it's a fairly easy case to make that the world will be awash in oil in a few years from now, relative to demand. >

Oil had been in a long bear market. It hadn't adjusted for inflation for a long while. And the rally was nothing but a huge catch-up rally, to adjust for years of nonperformance. These things happen in asset classes.

One of the best examples of this is the Chinese stock market. China grew massively, as an economy, between 1995 and 2005. Logically, the Chinese stock market (or whatever passed for it in those days), should have gone ballistic. It went nowhere. In fact, on a 10-year basis, the mainland China Shanghai Index was down. All this gross domestic product growth, all this massive investment in infrastructure, all amounted to nothing in terms of stock-market performance.

And then, in November-December 2005, China took off. And went up five times in just two years or so. And predictably, came the stories: China's GDP growth; China's massive consumption all things animate and inanimate; and China's mobile subscribers. All of that will keep driving up the Chinese stock market.

As always, logic was being fitted to suit the price. All the reasons for the boom in China had been existence for 10 years. But since the logic never fit the price, it was never used. The moment prices ran up, the logic was dusted out and presented to the world.

Fact was, as we had written in an earlier report, the Chinese bull market was nothing but the correction of a long-term aberration of high growth and poor stock-market returns. The market ran up just enough to temporarily correct the aberration…and that having been achieved, has promptly and dutifully halved, and then some.

It's the same with currencies. When the U.S. dollar goes down, people say "trade deficit." Never mind that the U.S. has always run a big trade deficit, and this hasn't prevented the dollar from going all over the place…being a weak currency and a strong currency, alternately, for the past several decades. And now, when the dollar has suddenly strengthened, people are blaming dovish statements from the European Central Bank, conveniently forgetting the trade deficit and interest-rate differential!

The short point is that currency and commodity movements are largely technical in nature. They have no value. Only price. And price, on its own, moves only on technical factors. Once the move happens, fundamental nonsense is drummed up to support the price.

It is our case. Nay, stand: Crude oil will tank (short-term bear-market rallies notwithstanding) to below $90 by this year end, and by our reckoning, should hit $50 in the next 12 months time. That's not such a reach, actually. Because that's precisely where it was in January 2007.

-- Devina Mehra -- Vishal Joshi -- Sabri Hazarika

Foreclosure fallout: Houses go for a $1

2008-08-13T15:33:00.002-04:00

My Comment:

Anyone driven through Downtown Detroit lately? The new owner will lose their shirt and will soon regret that lousy $buck

-Rinx

DETROIT -- One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit.

The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities.

.....And it still took 19 days to find a buyer.

The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods.

The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."

The company hired to manage the home and sell it, the Bearing Group, boarded up the home only to find the boards stolen and used to board up another abandoned home nearby.
Scrappers tore out the copper plumbing, the furnace and the light fixtures, taking everything of value, including the kitchen sink.

"It about doesn't make sense to put the family out," Upshaw said. "Once people are gone, you're gonna lose the house in this neighborhood."

Tuesday, the home was wide open. Doors leading into the kitchen and the basement were missing, and the front windows had been smashed. Weeds grew chest-high, and charred remains marked a spot where the garage recently burned.

Put on the market in January for $1,100, the house had no lookers other than the squatters who sometimes stayed there at night. Facing $4,000 in back taxes and a large unpaid water bill, the bank that owned the property lowered the price to $1.

$1 sale to cost bank $10,000

While it's not unusual for $1 to be exchanged when property is transferred for legal reasons, listing a home in the Multiple Listing Service for $1 was surprising and unsettling to Kent Colpaert, the listing real estate agent for the property.
"I've never seen a home listed for $1," Colpaert said.
"But it's been hit hard: It's just a shell."

On Tuesday, Realtor.com listed one other single-family home, one duplex and one empty lot at $1 in Detroit.

Dollar property sales are the financial hangover from the foreclosure crisis, said Anthony Viola of Realty Corp. of America in Cleveland.

Lenders that made loans to unqualified buyers during the height of the subprime market now find themselves the owners of whole neighborhoods of vacant, deteriorating homes.
"
No one has much sympathy for these banks that made subprime loans," Viola said. "And in some cities like Cleveland, judges aren't letting them sit on the properties -- they're ordering them to tear them down or sell them."

So desperate was the bank owner of 8111 Traverse Street to unload the property that it agreed to pay $2,500 in sales commission and another $1,000 bonus for closing the $1 sale; the bank also will pay $500 of the buyer's closing costs. Throw in back taxes and a water bill, and unloading the house will cost the bank about $10,000.

"It doesn't make sense in some neighborhoods to keep paying costs and costs," Colpaert said. "It can make more financial sense to give it away."

Buyer calls it an investment

Colpaert declined to provide the name of the prospective purchaser, because the deal had not been through closing. The agent did say that the buyer agreed to pay the full list price of $1, and planned to pay cash.

The buyer, a local woman, considers the home to be an investment property and will not live there, Colpaert said, though exactly how soon the buyer can expect to recoup her four-quarter investment is questionable. Replacing the guts of the house will costs tens of thousands of dollars, and the owner will have trouble keeping scrappers from stealing the improvements as quickly as they're installed. Home demolition costs about $5,000, Colpaert said.

Meanwhile, the new owner will owe $3,900 in property taxes in 2009 on her dollar purchase unless she challenges the tax assessment.

While selling a home for the amount of change most people could find between their couch cushions is unusual, some abandoned homes in Detroit sell for $100; vacant lots can be purchased for $300.

"My 14-year-old son could buy a block of Detroit property," said Ann Laciura, senior servicing specialist for the Bearing Group.

Geopolitics of Georgia

2008-08-10T14:22:00.008-04:00

Why the US Russia stand-off in Georgia?

Oh, perhaps the 1 million bpd oil pipeline running through Georgia connecting the rich Caspian Sea oil deposits to European and Israeli oil terminals.

This is the only route for Caspian Sea oil that does not pass through Russia or Iran.

US support of Georgia (one of 3 countries to send troops to help the US in Iraq) is a Russian bone of contention. Makes you wonder if the recent visit there by Condoleeza Rice had anything to do with Russia suddenly dumping $50B in Fannie Mae and Freddie Mac bonds.

Putin previously demonstrated he would use Natural Gas as a weapon (shutting gas off to Ukraine), is it any stretch to think he would use Russia's newly gained wealth in similar fashion?

- Rinx

China's Cars, Accelerating A Global Demand for Fuel

2008-07-31T07:25:00.002-04:00

My Comment:

Chinese consumerism on the rise, rapid buildout of suburbia, government incentives to purchase autos, subsidized fuel prices...is there any doubt the energy "crisis" will deepen?

With this kind of global competition for oil - and no supply response - demand needs to deconstruct ie) higher oil prices.

Oil at $120 has washed out consumers, and countries for that matter, with no discretionary income. What few grasp is demand will be more difficult to deconstruct as you move up the economic food chain. Consumers with discretionary income will pare back spending in areas other than fuel. Oil is priced at the margin - what the customer at the very bottom rung is willing to pay, and it will take exponentially higher oil prices to squeeze consumers out of the market.

- Rinx

SONGJIANG, China -- Nodding his head to the disco music blaring out of his car's nine speakers, Zhang Linsen swings the shiny, black Hummer H2 out of his company's gates and on to the spacious four-lane road.

Running a hand over his closely shaved head, Zhang scans the expanse of high-end suburban offices and villas that a decade ago was just another patch of farmland outside of Shanghai. To his left is a royal blue sedan with a couple and a baby, in front of him a lone young woman being chauffeured in a van.

"In China, size matters," says Zhang, the 44-year-old founder of a media and graphic design company. "People want to have a car that shows off their status in society. No one wants to buy small."

Zhang grasps the wheels of his Hummer, called "hanma" or "fierce horse" in Chinese, and hits the accelerator.

Car ownership in China is exploding, and it's not only cars but also sport-utility vehicles, pickup trucks and other gas-guzzling rides. Elsewhere in the world, the popularity of these vehicles has tumbled as the cost of oil has soared. But in China, the number of SUVs sold rose 43 percent in May compared with the previous year, and full-size sedans were up 15 percent. Indeed, China's demand for gas is much of the reason for the dramatic run-up in global oil prices.

China alone accounts for about 40 percent of the world's recent increase in demand for oil, burning through twice as much now as it did a decade ago. Fifteen years ago, there were almost no private cars in the country. By the end of last year, the number had reached 15.2 million.

More -> http://www.washingtonpost.com/wp-dyn/content/article/2008/07/27/AR2008072701911_pf.html

Administration: US bond rating safe despite deficit

2008-07-31T06:32:00.003-04:00

My Comment:

Since when does the US gov't feel compelled to talk up their creditworthiness?

And this line "It is a huge advantage to have that AAA-status and we are committed to that,"...doesn't that remind you of the Animal House scene where Hoover is talking up Delta's grade point average with Dean Wormer?!

-Rinx

Administration:US bond rating safe despite deficit
Wednesday July 30, 1:15 pm ET By Martin Crutsinger, AP Economics Writer

Administration says government's top-notch bond rating is safe despite soaring borrowing costs

WASHINGTON (AP) -- The Bush administration expressed confidence Wednesday that the United States would be able to maintain its top-notch credit rating even as the government scrambles to find new ways of expanding debt sales to cope with soaring budget deficits.

"It is a huge advantage to have that AAA-status and we are committed to that," Anthony Ryan, Treasury's acting undersecretary for domestic finance, told reporters as he unveiled plans for financing $171 billion in borrowing during the current July-September quarter, the second highest total on record.

Those borrowing needs have exploded this year as the government has had to cope with a sagging economy and the need to finance more than $90 billion in economic stimulus payments made over the past three months to individuals in an effort to keep the country out of deep recession.

Those problems are occurring at the same time that global financial markets have been roiled by reports of multibillion-dollar losses by giant banks and investment houses, reflecting soaring losses on mortgage debt.

"I am quite confident we will emerge from this with a stronger capital market," Ryan told reporters. "I have a great deal of confidence in our economy and our ability to work through these challenges."

Ryan praised the decision by Congress to include an increase in the government's debt limit to $10.6 trillion, up by $800 billion, from the current level, when it passed a sweeping housing rescue package last week. President Bush signed that bill which included the higher debt limit into law on Wedesday. One of its provisions expands the authority of the government to throw a financial lifeline to Fannie Mae and Freddie Mac, the two financial giants who own or guarantee nearly half the nation's mortgages.

Ryan refused to make an estimate of how long the new debt ceiling will be in effect but said it was helpful that Congress had been "proactive in managing the debt limit." Often raising the debt ceiling has sparked a huge political showdown with Democrats using the debate to criticize President Bush for presiding over a surge in the national debt while he has been in office.

The Treasury announced that it would raise $27 billion next week in two auctions of new 10-year notes and 30-year bonds, all part of $171 billion it will raise over the current quarter, a quarterly amount exceeded only by $244 billion the government borrowed in the January-March quarter this year.

The increased borrowing reflects the exploding federal budget deficit which is projected to more than double in size this year to $389 billion and to hit an all-time high of $482 billion in the 2009 budget year. The previous record deficit was $413 billion set in 2004.

The administration released the new deficit forecasts on Monday. It blamed the surge on the sagging economy and the effort to keep the country from falling into a deep recession by mailing out 130 million economic stimulus payments.

Democratic critics, however, charged that the soaring deficits showed the total failure of the Bush administration to put the government's fiscal house in order. They contended that whoever wins the presidency in November will inherit a huge fiscal mess that will severely restrain the next president's ability to fulfill his own campaign promises.

Treasury officials said that a variety of options for increasing the government's debt sales were being considered including greater frequency of sales of 10-year notes and 30-year bonds, but that no decisions had yet been made. In April, the government announced it was bringing back the one-year Treasury bill which it had stopped issuing in February 2001 during a period when the budget was in surplus.

The 2001 surplus, the fourth in a row, was also the last time the government's books were in the black as the 2001 recession and increased spending to fight wars in Afghanistan and Iraq and, Democrats contend, Bush's first-term tax cuts brought a return of deficits.

The deficit estimate of $482 billion for the 2009 budget year, which will cover the first year of the new president's term, could soar higher because it includes only a partial payment for the wars in Iraq and Afghanistan.

Peak Oil vs Peak Exports: What's the difference and which should we be more concerned about?

2008-07-30T08:55:00.002-04:00

If you have an hour this is a must watch video.

http://mediasiteson.sandia.gov/Mediasite/Viewer/Viewers/Viewer320TL.aspx?mode=Default&peid=db3a600e-e93f-43ae-80d8-0f1cfbb328fe&pid=44148de6-159c-468f-b4ac-0b2490591d15&playerType=WM64Lite#

How Far Does $500 Worth of Diesel Take You?

2008-07-29T15:49:00.001-04:00

Click to enlarge

What's the Link Here?

2008-07-29T09:13:00.003-04:00

A: Peak Oil

Two headlines from local newspapers seemingly unrelated, but evidence Peak Oil is wreaking havoc with peoples lives who are caught in the wrong industries.

Air Canada flight attendants protest job cuts

Air Canada flight attendants are rallying in several cities this afternoon to pressure the airline to reverse its decision to close crew bases in Winnipeg and Halifax, slashing hundreds of jobs.

More http://toronto.ctv.ca/servlet/an/local/CTVNews/20080728/flight_attendants_AM_080728/20080728/?hub=TorontoNewHome

CAW Reaches Close-out Settlement with GM for Oshawa Truck Plant

TORONTO/OSHAWA, ON, July 28, 2008 /PRNewswire via COMTEX/ -- The CAW has reached a settlement with General Motors covering the closure of the Oshawa truck plant, scheduled for July 1, 2009

More http://www.marketwatch.com/news/story/caw-reaches-close-out-settlement-gm/story.aspx?guid=%7B254FE769-E0CD-4F44-94CA-A0CD37C93A36%7D&dist=hppr

The Coming Re-becoming

2008-07-29T08:03:00.003-04:00

http://jameshowardkunstler.typepad.com/clusterfuck_nation/

My Comment: I enjoy reading Kunstler's blog on Monday mornings, but I'm not sure I agree with with this one - prolific tattoo art is seemingly evidence America is tightroping the economic and social precipice.

- Rinx

-- Everywhere you turn in this nation, you see a society primed for implosion. We seem unaware how extraordinary the American experience has been, especially in the last hundred years. By this, I don't mean that we are a better people than any other society -- these days, ordinary people in the USA make an effort to appear thuggish and act surly, as though we were a nation of convicts -- but for decade-upon-decade, we were very fortunate. Even the Great Depression of the 1930s may seem like a relatively peaceful and gentle "time out" from a frantic era of hypertrophic growth, compared to the storm we're sailing into now.

We were fortunate to inhabit a New World filled with productive land, lots of minerals, and plenty of coal, oil, and gas; and the land itself was insulated physically from the great theaters of 20th century conflict, though we fought in wars "over there." That experience itself, especially our victory over manifest evil in the Second World War, left us with a dangerous mentality of triumphal exceptionalism. Even now, we think we are immune to the epochal hazards of history. The notion that nothing really bad can happen to us is reflected in the blind cluelessness of our current news media and their simple failure to report what is now happening.

I drove up along an obscure stretch of the upper Hudson river on Sunday, starting in the old factory town of Cohoes, north of Albany, where the Mohawk River runs into the Hudson. There is a powerful waterfall there, and along the high bank the massive old red-brick Harmony Mill still stands with its Victorian towers and mansard roofs, like a vision from an Alfred Hitchcock movie. Behind them are streets of red-brick, three-story worker row-housing from the same period. Today they are inhabited by a different kind of poor people, not necessarily working, and probably suffering from a sheer lack of structure in their lives as well as plain poverty of means. These are people who probably don't follow the Bloomberg financial bulletins, and their experience of a cratering economy may only be the rising cost of cigarettes and beer.

The tattoo quotient among both men and women there is impressive. In the days when the Harmony Mill was built, only South Seas cannibals and sailors wore tattoos. You wonder: are tattoos now the only way left for this class of Americans to assert their selfhood? And what exactly are they proclaiming? I am a warrior. Or is it: I am a television (I display pictures, too) !? The expanding class of the poor-and-idle has been remarkably passive in the face of their dwindling prospects. Perhaps they passed the point years ago (a generation or two ago!) when there was any sense of sequential improvement for the family's station-in-life. The destiny of their everyday lives must seem totally beyond their control. They are subject to the fate of distant corporations who sell the staple corn-syrup byproducts and gasoline on which daily life is based. Where government is concerned, they are all potential victims of Katrina-ism, awaiting their own personal disaster.

North of the junction of the Mohawk and Hudson was the old town of Waterford, where the Erie Canal began its journey west -- bypassing those powerful waterfalls. The locks are still there and still in operation for the infrequent tanker ships and ore barges that come and go to the Great Lakes. But the operation of the canal system is automated to the extent that it requires only a handful of people to run the locks now, and the town around them has deteriorated into slum and semi-slum garnished with a few convenience stores and pizza shops. There is no other commerce there. No matter how poor, the denizens are required to drive a car to a giant chain store for groceries or hardware or clothing.

As you leave Waterford, the river road becomes a suburban corridor of 1960s-vintage ranch houses and stand-alone small retail business buildings which, if used at all now, are mostly hair salons, chiropractic studios, and other services not generally rendered by the chain stores. All this stuff was deployed along the road with the expectation that Americans would be driving cars cheaply forever. Now that this is distinctly no longer the case, corridors like this are entering their death throes. The awfulness of the design and construction of these buildings is now especially vivid as the plywood de-laminates, and the vinyl soffits fall off, and the dinge of neglect forms a patina over it all. Hopelessness infects this landscape like a miasma. Whatever young adults remain in these places are not thinking about a plausible future, only looking to complete their full array of tattoos and lose themselves in raptures of sex, methedrine, and video aggression.

Eventually, after running through the disintegrating towns of Mechanicville (once a place of earnest labor, just like it sounds, now a morass of sinking car dealerships and Quik-stops), and Stillwater (smaller version of the same), the road turned completely rural and few other cars ventured up there. The decisive Revolutionary battle of Saratoga was fought near there on the bluffs and hills overlooking the Hudson in 1777. You wonder what the heroes of that battle would think of what we have become. What would they make of the word "consumer" that we use to describe our relation to the world? What would they think of excellent river bottom-land that is now barely used for farming -- or, where it is still farmed (dairying if anything), of farmers who will not even put in a kitchen garden for themselves because it might detract from their hours of TV viewing?

The sclerosis of American life is shocking. If you go further north up the Hudson River, to Fort Edward and Hudson Falls, you'll see a nation that seems ready to crawl off and die. There, it appears too far gone to even put up a proxy fight on a video screen. Frankly, I don't want that version of America to survive -- the America of chain stores, and muscle cars, and grown men obsessed with video games, drugs, and pornography, and women decorated like cannibals, and the vast, crushing purposelessness of it all. I have no doubt we're heading into a convulsion that will wring much of this junk and dross into the backwaters of history. We're capable of being something better than this, of putting our time on earth to better use, including a more respectful treatment of the land we inhabit. This year and the next will be the years of letting go, and out of that we'll commence a re-becoming.

Groppe's Oil Outlook

2008-07-28T09:17:00.005-04:00

Groppe's Oil Outlook

This contrarian sees an oil-price correction ahead, and decries the accuracy of world production and demand data.

My comment:

Peak Oil is real and it is here.

Witness $10 crude in 1998 rocketing to $145 in July 2008.

Clearly demand has exceeded supply and the market is functioning as it should - by choking off demand through price mechanism. Dozens of 3rd world countires are shut out of the oil market at current prices and their industries struggle as they can't afford the power to run them. In 1st and 2nd world countries consumers at the margin are no longer able to fuel their vehicles, and struggle to heat and power their homes.

The savage increase to $145 should cause demand to fall faster than supply, so I agree with Groppe when he says we are due for a near term price correction in crude* but the LT trend is still higher.

*Caveat: Geopolitics remain relative benign

The world has not run out of $140 Oil, or even $100 Oil - but certailny $10 Oil and even $50 Oil are gone forever.

In days, months and years ahead we should see Oil pinball to new highs and higher lows. High price will cause demand destruction and price will correct to a level where demand corrects and begin another price appreciation cycle. In the face and fact of Peak Oil, the whole price process will grind higher -it has to.

-Rinx

Article By Leslie Haines
Published Jul 1, 2008

Watch for falling comsumption worldwide and an oil-price correction soon, says Henry Groppe Jr., founder or Groppe, Land & Littell. For more than 50 years, Henry Groppe Jr. and his firm, Groppe, Long & Littell, have studied the minutia of global oil supply and demand. More than once, they have gained notoriety for calling a new direction in oil prices that flew in the face of the consensus. For that, they have gained the loyalty of long-time clients that include major oil and gas companies, independents, chemical and refining companies, financial institutions and governments.

Groppe thinks there may be an oil-price correction in the third quarter that “is likely to be abrupt, with the price rising again over time.”

Groppe (rhymes with copy) is in his 62nd year in the business and by all accounts, is going strong, thanks to a lifestyle based on the work of best-selling medical author Dr. Dean Ornish, whose research Groppe has supported for years.

After graduating from the University of Texas with a degree in chemical engineering, he served in the U.S. Navy. Next, he worked for Dow Chemical, Texaco and the Arabian American Oil Co. (Aramco) in Saudi Arabia for three years, where he began a decades-long friendship with fellow UT alum Abdullah Tariki, the first Saudi oil minister and a co-founder of OPEC, before forming his own firm in 1955.

It still has only six employees because Groppe prefers to keep it small, nimble and simple. He’d rather spend time on intricate data analysis and with clients, instead of managing people.

Groppe was formerly a director of Tom Brown Inc., working with that company’s chief executive at the time, former Commerce Secretary Don Evans. And, he has been on the board of UT’s engineering school for nearly 30 years.

Now with Evans, ExxonMobil chief Rex Tillerson and other energy and utility luminaries, he has helped form a new kind of energy think-tank that will spend millions of dollars during the next 10 years. The Energy Institute at UT’s mission is to help develop sustainable energy supplies for the U.S. It will study world consumption patterns, energy efficiency and distribution, and identify where new research is needed.

He strongly believes the U.S. should be and can be the world leader in new energy technologies.

His preferred long-term energy source? Fusion.

With oil prices topping $130, it was time for Oil and Gas Investor to ask Groppe for his outlook, getting that and more in a wide-ranging, four-hour conversation that touched on declining Russian oil output, peak oil, OPEC’s big mistake, Chinese demand, the state of U.S. education and neuro-biofeedback.

Investor What do you make of $130-plus oil?

Groppe The world’s never seen anything like this. But there’s no way oil is going to rise to and stay at $150 or $200—consumption is responding all over the world.With inventory changes and OPEC adding about 1.5 million barrels a day in the past few months, if I had to guess, I’d say we’ll see a correction in the third quarter this year. These kinds of bubbles—their timing and magnitude are hard to predict. My guess is, the correction will likely be abrupt, with the price then rising again long term. Oil is in short and declining supply, and prices have to be at a level where you can produce as much as you can.Given enough time, the fundamentals always express themselves. Something’s got to give and industrial demand always goes first—consumer behavior takes longer.

Investor You say OPEC has made a mistake?

Groppe OPEC cut production in late 2006 because they thought there would be a 1.3-million-barrel increase in daily non-OPEC production in 2007. That would have been the highest non-OPEC increase since 1984, by the way. What actually happened was, there was no increase in non-OPEC oil production in 2007, and demand was fairly steady.But OPEC cut production by about 1.2 million barrels a day, and we drew down world inventories by about 800,000 barrels a day. Then in January and February this year, we had extra cold weather and we needed oil that wasn’t there, so we drew down inventories again. That’s why oil prices are where they are.

Investor You are a big believer in peak oil.

Groppe Peak oil has arrived and, of course, everyone is confused by it. It’s clear to us that total non-OPEC and most of OPEC’s production is peaking. And Saudi Arabia—the only country with significant unused capacity—is continuing its policy of limiting production, to postpone the day that their oil runs out. Oil prices must maintain levels required to reduce consumption, to match these irreversible declines in total future supply. We’ve been anticipating this for a long time.

Investor What about Saudi Arabia’s ability to do more?

Groppe They have launched a long-term program to raise their productive capacity to 12.5 million barrels a day. They’ll get there in a couple years. They also plan to create jobs by building more refineries and petrochemical plants in the kingdom. That is probably misplaced because those are so capital-intensive, and they employ not as many jobs as you’d think. But that is al Naimi’s plan, to create manufacturing jobs eventually.I admire him for being so dedicated to wanting to do whatever it takes for an ongoing, viable economy for the Saudis.

Investor When did you start sounding the alarm about the peak?

Groppe About 10 years ago, we concluded the peak would happen at roughly this time. I still don’t know exactly when the peak year occurred—that is less meaningful than the fact that it is happening. We did pinpoint almost to the year that the Soviet Union would begin to decline now.

Investor Why?

Groppe The FSU (former Soviet Union) peaked in the 1980s at more than 12 million barrels a day. But with the political collapse in 1989, the economy fell apart and internal consumption fell by 6 million barrels a day.In 1994, they privatized their oil companies and the companies contracted and brought in thousands of engineers from Halliburton and Schlumberger. They just did the easy things to bring production back up to 12 million barrels a day—at which point the decline has kicked in again.The irony is that, when President Gorbachev diverted money away from the provinces (satellite countries like Kazakhstan and Azerbaijan), they could not increase their oil production—and now, of course, they are exploiting those reserves for themselves. There is also still huge potential in eastern Siberia.

Investor Why is the world in trouble as far as production goes?

Groppe There is little correlation between production and resource base around the world. Look at Alberta—it has the second-largest amount of oil reserves in the world and yet it is only producing just over 2 million barrels a day—and with great difficulty. But it’s important because it can, actually grow production in the future.There are two things at work in all this. First is depletion. The second thing is equally or more important, and that is, exploration is a rational process: everybody looks for the biggest deposits first and develops them. From 1945 to 1970, the U.S. doubled its production with big new finds and then peaked.But in the 38 years since, oil prices have increased 50-fold, the technology is obviously much better, we’ve had a large number of competitors—and none of that has offset our decline. The latest example of this trend is the North Sea and Mexico. One country after another, it is happening.Last year, for the first time in many years, the U.K. was a net importer of oil. They exploited their reserves rapidly, sold their oil for $20, and now they are buying it back for $120.

Investor What about all the untapped resource base in the world?

Groppe You never run out of oil, but we ran out of $10 oil 35 years ago, and we have now run out of $50 oil. There will be an oil industry 100 years from now, just like there has been in Appalachia for 100 years. They have third- and fourth-generation oil people there, using new technology.The conventional forecasts from the likes of ExxonMobil and the Department of Energy say that the resource base keeps improving and technology keeps improving, so they assume oil production can continue going up. We disagree completely.We find that most forecasts—no matter who is doing it and what has been forecast—are usually a straight-line extrapolation of what’s been happening recently. But our work has been focused on forecasting major discontinuities because that’s how the world really operates. The world doesn’t operate in a straight line.

Investor Explain how you do that.

Groppe We try to do very detailed, bottoms-up work. Activity in the world is so diverse and discontinuous. Every place has unique reserves and a unique cost structure. If we could do a thousand studies, the more accurate the composite answer would be.The next big set of surprises will be on the consumption side.

Investor How so?

Groppe You’d need to do thousands of studies on each type of use in each part of the world to really understand it. We’ve been working on that for more than a year.There are only about 400 or 500 refining-company oil buyers in the world who buy raw crude. The one thing we’ve found is accurate is oil-import data, because generally each country’s importer pays an import duty on every barrel and would not lie about that. We look at each country’s production, what they import or export and what they net out for their own consumption and we learn where the mistakes are in the data, and try to get closer to the truth.Investor What have you found out?Groppe We don’t agree that new demand in China and India will overwhelm consumption declines in the OECD (the Organization of Economic Cooperation and Development) countries. Total world consumption growth has actually been leveling since oil passed $40 in 2004.Yes, from 2000 to 2004, the average annual increase in Chinese oil consumption was about 8% per year. But since then, the average annual increase in China has been more like 3% per year—less than half the rate that it was.The universal explanation for inexorable growth in demand is China, but that has to be examined more closely. Everybody talks about cars there, but two-thirds of their oil use is for power generation, industrial and other consumption. They are trying to cut back on their need for imported oil by using more coal, which they have plenty of—last year they brought on the equivalent of a new 1,000-megawatt coal-fired power plant every five days! The world has never seen anything like it.So, there doesn’t have to be any increase in total oil demand in China for years—as internal use of coal displaces oil used for power and other uses, and makes that oil available for transportation uses.In the past three years, they only increased their oil demand an average 200,000 barrels a day annually—I’m sure consumption in the U.S. will drop by more than that this year.This is the kind of detailed study we do of world oil consumption.

Investor What about other data, like from the International Energy Agency?

Groppe The IEA data is the worst. It’s almost fiction. Their problem is structural—they are a classic bureaucracy and most of the employees are mathematicians, economists or computer programmers, not oil-industry people. They have no leverage on anybody reporting data except the member OECD countries.In the past, OPEC has exaggerated its production by as much as 1.2- to 2 million barrels a day. That’s a huge error in an 84-million-barrel-a day market. We’ve looked at this over time and a 100,000-barrel change in production or consumption moves the price by about a dollar a barrel. We’ve tested this through many cycles and it always works. So that could change the price by $12 to $20 a barrel!

Investor What do you think of alternative fuels?

Groppe As we exploit lower- and lower-grade resources, we’ll be doing more work on alternatives. In a free political system like ours, you can’t get anything done until there is a crisis. In an emergency, you do 25 things at once and usually, they are all wrong. Ethanol from corn is one example.Ultimately I think it’s likely to be something like fusion energy. That’s got a lot of problems, but if you accelerate the research now, maybe in 50 years when oil is a less prominent part of the supply we use, we’ll be able to phase it in.

Historic Financial Collapse Underway?

2008-07-20T19:39:00.002-04:00

I give credence to this article for a number of reasons;

1) I got burned by Lucent in 2000 (my only tech debacle)
2) I went home from Las Vegas July 2007 and couldn't stop thinking this place is doomed, and I mean ground zero for all the future ills facing America - energy crisis, water crisis, moral debt (something from nothing), financial debt (consumer and government), and and. (the true indication of rampant inflation might be the The Bay City Diner in old Vegas raising their decades old price on their famous shrimp cocktail ($1.99)...when that happens, I'm 100% GOLD!)

http://seekingalpha.com/article/85669-historic-financial-collapse-underway

Tunnel Vision

2008-07-18T08:17:00.006-04:00

Once Again, Week’s Most Important Energy News Has Gone Unreported By Media In U.S.

Most of the U.S. news media still doesn’t understand that the important energy news is happening outside the United States. Once again this week, cameras rolled as the White House and Congress bickered for partisan advantage, this time over offshore oil drilling. Meanwhile, half a world way, three events – one indicative of the growing risk of a shooting war over energy – were completely ignored.

By far the biggest overlooked event took place at the Russian shipyard in Severodvinsk exactly one week ago. There, according to Agence France-Presse (AFP) news agency, Vladimir Putin said Russian oil production was down in the first quarter and the industry was now at a “critical juncture.” The statement was ominous because Putin was at the shipyard to observe construction of Russia’s first Arctic oil drilling rig. He told his audience Russia would “defend our national interests.” Three days later AFP reported, “The Russian Navy on Monday said it was boosting its combat presence in the Arctic, including near the Norwegian island of Spitsbergen, amid increased international interest in the region.”

Compared with the growing risk of a shooting war over oil in disputed areas north of the Arctic Circle, the news from Pakistan last week probably seemed none-too-exciting to American outlets that generally only report on Pakistan when violence breaks out. The news was that Pakistan’s energy crisis was rapidly worsening, with even “elitist areas,” as one newspaper described them, now suffering hours-long blackouts. “(O)ne shudders to think (of) the fate of rural areas,” the newspaper noted. And yet, it’s exactly in those rural areas that the Taliban keeps getting bigger and bolder. As Pakistan’s energy crisis worsens, how long might it be before anarchy overwhelms a weak central government, turning all of Pakistan into a new Afghanistan, a new haven for terrorists?

Last week the rich got richer, the poor got poorer, the world moved closer to war over energy – and the U.S. media reported none of it.

Fed in Action

2008-07-17T06:08:00.003-04:00

Caption alternatives:

Bernanke, Paulson & Bush to the "rescue"
Moral Hazard meet Fire Hazard
Don't play with mortgages, or you will get burned
"Don't worry, we got plenty of mon...er water, it's a bottomless well!"
"Heck, this is a campfire, wait 'til Social Security blows up"

Wholesale Inflation tops 9%

2008-07-15T09:10:00.002-04:00

But CNBC soothsayers note core inflation is holding at 3%, of course that's useful to anyone who doesn't consume food or energy.

Europe and Asia down 2% today, futures point to a weak open in the US, Oil at $146, USD at ATL vs Euro, Fannie & Freddie on the ropes again premarket...and it's a Tuesday, a classis capitulation day. All signs point to a washout in the market...but I don't think we'll get it, just another swirl around the sink before the eventual drain. Heck, the VIX is not even $30...not enough fear yet. When the day comes, it will be fugly. Got gold?

Jim Rogers sets the record straight

2008-07-15T09:02:00.001-04:00

Oil speculators are getting killed: Jim Rogers

http://www.commodityonline.com/news/Oil-speculators-are-getting-killed-Jim-Rogers-10403-3-1.html

Oil speculators are getting killed: Jim RogersBy George IypeSINGAPORE: Investing legend and commodities guru Jim Rogers says crude oil prices have been going up thanks to an unprecedented demand-supply mismatch. He said those who blame speculators for oil price surge do not understand the oil reality in the world.Talking to Commodity Online, Rogers, who founded the Rogers International Commodity Index, said he has been predicting all these years that oil price would go up because of shortage of supply.”Some people blame speculation for oil price rise. If it is speculation, when the oil price is too high, the people with oil will drown the speculators. It is just a stupid accusation that speculators are behind the oil rally,” he said.He asked: “If people have oil, do you think speculators could have driven the prices too high like this?” “No. People are spreading all speculative stories that speculation is driving up oil prices. That is not correct,” the legendary commodities investor and author of such celebrated books such as Hot Commodities and A Bull in China, said.He said the truth of the matter is that there is so much shortage of oil in the world. “The shortage of oil in physical market is higher than in the futures market. That is the reason for the high crude oil prices,” he said.”Those who blame speculators for the high oil prices, I would like to remind them that in futures market every time somebody buys oil, every time the speculators buy oil, the speculators also sell the oil,” Rogers, who is now settled in Singapore said.He said the US government data says that there are more speculators on the sell side than on the buy side in crude oil market these days”.”Speculators are getting killed these days; they are loosing money heavily these days. They are selling panicky these days. They are right in selling, because there is no oil to hold on. I wish somebody saves the speculators who are selling. The fact is that there is no oil for delivery and they know that they are not sitting on oil,” Rogers added.

One of the better rants I have read in a long time

2008-07-14T11:01:00.002-04:00

"They're Looting America in Broad Daylight ..... Right Under Your Nose."re: ["Slider, Please respond to this disturbing rant."The Greatest Crime in History."]

http://www.financialsense.com/Experts/2008/Burrell.html

SMH,Please respond?

You betcha I'll respond, because naked shorting is only the tip of the iceberg. Naked shorting and failures to deliver are not the"greatest crime in history." The greatest crime in history, has been the systematic looting of Americain broad daylight by greedy Wall Street insiders,facilitated by corrupt politicians, and financed bypuppet central bankers controlled by the globalist,new world order elite.I know, I know... some of you are already rolling youreyes...New World Order, Globalist Elite, Bilderbergers,here we go again... Please bear with me... and keep an open mind.But, before I get started on a rant on the "real" Greatest Crime in History... I'll answer yourquestion by sharing two revealing exposes on naked shorting,one an award winning video from Bloomberg News, and the other,a very compelling slide presentation from Patrick Byrne ofOverstock.com.Before you dismiss Byrne as a kook, watch his presentation.His presentation, along with the video from Bloomberg, willdispel any notions that you may have, that naked short sellingis about shady characters working out of bucket shops, orboiler rooms in New Jersey. Because it's not. It's aboutBroker Dealers working out of corner offices on Wall and Broad.Here's the Bloomberg Video:http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vIrfhgQPAJ1s.asf

And here is Byrne's power point slide presentation - whichin words and pictures, will educate you as to the mechanicsof naked short selling. Whether you agree, or disagree,like, or despise Byrne... it's a very educational videothat will make the entire subject of naked short sellingunderstandable. Watch it - period.http://www.businessjive.com/nss.aspx

This subject is something that I and many others here havecommented on many times over the last couple of years. And it encompasses much, much, more than just naked short selling.Most if not all of those comments have (until now) beendismissed as either conspiracy theory hogwash, or as bitter, partisan political rants, as was this one, which I postednearly 2 1/2 years ago...

From: SliderOnTheBlack 2/16/2006 9:26:52 AM "The Most Profitable Crime in the History of the World!"http://siliconinvestor.advfn.com/readmsg.aspx?msgid=22173158From 1789 to the year 2000 -- it took 42 prior USPresidents and 211 years to accumulate $1.01 Trillion in government debt.But, it only took George W. Bush 4 years to nearly double US debt -- addding another mind-boggling $1.05 Trillion ofgovernment debt...that now rests not just upon the shouldersof U.S. Taxpayers...but, now upon the shoulders of theirchildren...and their children's-children.That my friends... is both the greatest theft in the Historyof the World, but also the greatest transfer of wealth in the history of the world...The Bushites have assured us that deficits and debt don'tmatter....in fact why are you even paying attention to thedebt & deficits behind the curtain.... you should beparticipating in the robust, inflation free economy andbe damn thankfull for what Bush #43 has done for theAmerican citizenry over the last 6 years !-- you could buy 50% more house than you otherwise ever could have afforded...hell, we even let you borrow 125% ofwhat your present house was worth... we even let you do itwith bad credit and no money down -- so whatcha bitchin' about debt & deficits for ?...pay no attention to the little man behind the curtain !-- there's also no inflation:... well, at least if you don't count food, energy, housing,taxes, insurance, college tuition, or anything else you spendyour money on.-- and you economists... and hawkish politicans like Ron Paulof Texas... shame on you for bringing up M3.-- there's not only no more inflation... there's no more M3....if we say you don't need to pay attention to M3 any more -believe us...it's not like we've ever lied to you in the pastabout anything before ?And as far as worrying about what rising Energy prices aredoing to the US Economy ?Don't Worry -- Be Happy !-- You've got the Bush/Cheney/Halliburton/JamesBaker/Saudi/ExxonEnergy Policy protecting you !Don't pay any attention to the fact that Japan has added23 LNG Terminals and the US has only added 4.Don't pay any attention to the fact that France has added 53nuclear power plants in the same timeframe that the US hasadded 1.Don't pay any attention to the fact that China has seen thelight and has 20+ Nuclear Power facilities coming online.The Bush Energy Plan...is working !At least for the Investment Bankers who increased theirinvestment in the US commodity futures markets from $15Billion in 2003 to over $100 Billion today -- as recentlyreported by Fimat USA's John Kilduff on CNBC.Shame on Aunt Millie - for not allocating an adequate portionof her Social Security check to Natural Gas Futures -- it'snot our fault she's shivering in the dark, cold and having toeat kibbles and bits out of a can... this is a Free MarketEconomy ...she had the same opportunities as the derivativesunit from Goldman had."

And these thoughts from this past March...http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24454109From: SliderOnTheBlack 3/31/2008 9:21:48 AM 28 Recommendations "From Super SIV to "Super Shiv"..."They're LOOTING America in broad daylight...right under your nose."Remember when you were told that a group of America'sstrongest banks were going to band together and forma "Super SIV"? Do you remember, when Paulson said this was the cure,that markets would provide - market solutions...and that the worst was now behind us?Well the "the worst" wasn't behind us - now was it?And markets didn't provide "market solutions" - did they?And that "Super SIV" where banks would bail out banks,never happened - did it?Well guess what?YOU my friend, are now providing the solution.Taxpayers just like you, and me - are now bailing out the banks....that's their solution.Taxpayers just like you and me - are now funding the new"Super Shiv"... and yes, that's shiv - not SIV.Shiv as in - a knife in the back of taxpayers.Did you see James Lockhart on CNBC last week? Lockhart isthe director of the Office of Federal Housing EnterpriseOversight, commonly known as OFHEO. His job is to oversee the GSE's like Fannie Mae and FreddieMac. In his interview on CNBC, Lockhart admitted that the one valid criticism that he would "not try to defend" - is that Fannie and Freddie - "are now indeed - too big to ever be allowed to fail."How big is big - you ask?How about $5 Trillion big. Yes, Trillion with a "T."And how big is Five Trillion Dollars?$5 Trillion is equal to the entire U.S. GDP - that's how big.And guess what? Not only are you, and I, going to fund the new "Super Shiv"...but, you and I are also going to absolutelyend up funding the ultimate bailout of the GSE's. Becausethe GSE's are going to fund the bailout of the banks andnow the investment banks.Fannie & Freddie's mortgage market share has now growna staggering +50% just since 2006. They now control 76%of the U.S. Mortgage market.Yes...76%.I'd say that's too big to fail - how 'bout you?And what have they just done with Fannie & Freddie?They lowered their capital requirements, and easedtheir lending standards.Now given that they have the same underlying "credit crisis"problems as Countrywide, and Bear Stearns... can you imagineanyone offering up a solution that would allow Countrywide &Bear Stearns to increase their market share by +50%, to lowertheir capital base, and to widen and loosen their lendingstandards?Does that sound like recipe for a fix, or a recipe fordisaster?My friends, we have just witnessed a historic turning point.And that turning point was not about the subprime mortgagemess, it wasn't about the collapse of housing, not about thecredit crisis, and it wasn't about the Fed bailout out of theinvestment banks.It was the death of America's middle class as we now know it.And that death was delivered by the greatest transfer ofwealth in all of history. A transfer that happened in just8 short years. A transfer that occurred via unbridled greed,leverage, and a lack of oversight. Greedy Wall Street insiders did it, and money grubbing, power hungry, and asleep at the wheel, politicans and central bankers allowed it to happen - in broad daylight,right under your and my nose.Wall Street insiders used an unprecedented degree of leverage,and financial engineering to suck billions and billions out of the U.S. economy... sucking it dry to the point that it isnow collapsing from the weight of a pile of it's own worthlessderivative paper.And what they've left you and I - is rampant inflation, ahollowed out Dollar, deficits as far and high - as the eye can see, a collapsing economy, and unfunded liabilities insocial security, medicare and the GSE's, for which you and I,our children, and our children's - children - will spendthree generations paying for.They have $25 million dollar apartments on 5th Ave,vacation homes with helipads in the Hampton's, and Yachts the size of ocean liners in Boca... and you and I, - we have the bill.And how big is that bill - you ask?Well don't take my word for it... let's use former U.S. Comptroller General David Walkers numbers.Estimates range as high as $450,000 per U.S. household.The GAO (the General Accounting Office) estimates that by2040, current policy will require a 50 percent reduction in federal spending, or a doubling of taxes to balance the budget. Given our history - do you think America will reduce spending by 50%... or, raise taxes?And just in case you were wondering? Do you think most ofthose Wall St. fat cats who just sucked America dry -care? ...given how capital gains & private equity firmsare taxed?And how is our government going to fix all theseproblems?With more Debt!Our government is now running up $5 of debt, for every $1 of GDP growth that spending produces. If a private business produced those results - they'd bebankrupt very quickly. But, instead of going bankrupt - our government just piles on more, and more debt onto thebacks of our children's - children.And if you think Barack Obama, Hillary Clinton, or evenJohn McCain are going to solve that problem... just wait for my next rant...S.O.T.B.

And as far as the agenda of the NWO, don't take my word, take the words that I'm going to show you coming out of themouths of Gordon Brown, Henry Kissinger, Dick Cheney, GeorgeH.W. Bush, and David Rockefeller & Company. Let them tell youin their own words what their agenda is.Because as America's freedoms are stripped away, as our Treasury is looted, as our currency is being systematically debased and destroyed... as our financial system is beingbankrupted, and our markets looted... those wishingto bring America to heel under a New World Order,are no longer even hiding in the shadows, or behindgated walls... they're openly talking about it tothe likes of Charlie Rose, FOX, and CNN...Here's Gordon Brown, George H.W. Bush, andHenry Kissinger...http://www.youtube.com/v/1xIjydXfePY&hl=en&fs=1...pay attention to Kissinger talking about how George W. Bush may become the seminal President inthe transformation of America into the new worldorder.http://www.youtube.com/v/pVEPlxwlzCE&hl=en&fs=1And here's Dick Cheney's now famous exchange withDavid Rockefeller about how Cheney hid his CFR(Council on Foreign Relations) affiliation from voters in Wyoming...http://www.youtube.com/v/BbnpN07J_zg&hl=en&fs=1Here's another interesting interview with DickCheney in 1994, concerning why we should not have marched into Baghdad in the first Gulf War.Of note: Cheney became the CEO of Halliburton oneyear later in 1995...(my how things changed).http://www.youtube.com/v/csKkdKlLUTc&hl=en&fs=1Historically, how have the global central bankersmade the most money? By financing wars, and the debt, and deficits they cause.I'm sure most of you have seen this video on formerPresident Dwight D. Eisenhower's farewell addressto the American people, and his warnings about the growing political, and social influence of the Military Industrial Complex.If you haven't seen his speech, here's the link:http://www.youtube.com/v/8y06NSBBRtY&hl=en&fs=1If you have heard his speech... here is everythingEisenhower warned us about, coming true.I promise you that regardless of whether you area Democrat, or a Republican... whether you supportthe war in Iraq, or you don't... this video belowwill enlighten, inform, and educate you to the realities of what Eisenhower so prescientlywarned us about.This video is a must see. It is 75 minutes long. Bookmark it, and at least watch it later. I assure you, it will not be wasting your time...This is everything Eisenhower warned us about:"Iraq for Sale"http://video.google.com/videoplay?docid=-6621486727392146155And if you think that video was politically slanted,here's Senate testimony about $2.3 Trillion, yes...that's trillion with a "T"... $2.3 Trillion Dollarsunaccounted for from the Department of Defense,and that number comes from the DOD's own auditors.To who's pockets do you think that $2.3 Trillion flowed?And don't forget about the pallets of missing cash fromIraq. Remember this?http://www.vanityfair.com/politics/features/2007/10/iraq_billions200710"Between April 2003 and June 2004, $12 billion in U.S.currency, much of it belonging to the Iraqi people, was shipped from the Federal Reserve to Baghdad, where it wasdispensed by the Coalition Provisional Authority. Some of the cash went to pay for projects and keep ministriesafloat, but, incredibly, at least $9 billion has gone missing,unaccounted for, in a frenzy of mismanagement and greed."............."$9 Billion in Missing CASH"And for those of you who still think the NWO/New World Orderis a figment of the imagination of conspiracy theory nuts,here's a speech from President John F. Kennedy on the threatof "covert infiltration, and a monolithic conspiracy" fromwhat is now known as -- "The New World Order." In this speech, JFK could easily be talking about FISA, the Patriot Act, and the NeoCon agenda of today...http://www.youtube.com/v/ndi1YLkvEXM&hl=en&fs=1But, what does the War in Iraq, or the NWO have todo with naked short selling?In a word -- everything. Naked shorting is just another"stream of income" for the globalist elite. But, War is themost lucrative, and influential vehicle of bankers.Here's a series of clips from the movie Zeitgeist, with an excellent historic perspective on the Fed,the Great Depression, and the Globalist Elite.J.P. Morgan spreading rumors, creating a bank run, and panic. The Fed rapidly expanding the money supply, then contracting it, and creating a banking collapse,whereby insiders could step in and snatch up assets onthe cheap.Sound familiar? Can you say Bear Stearns, Fannie & Freddie deja vu all over again?This is an excellent historic perspective on the Fed:Part I:http://www.youtube.com/v/_dmPchuXIXQ&hl=en&fs=1Part II:http://www.youtube.com/v/lBZne09Gf5A&hl=en&fs=1Part III:http://www.youtube.com/v/SjUrib_Gh0Y&hl=en&fs=1Part IV:http://www.youtube.com/v/_BVNN1wqw3k&hl=en&fs=1Part V:http://www.youtube.com/v/VPPFgHF9VR4&hl=en&fs=1You can access the movie -- "Zeitgeist" in it's entirety here:http://www.zeitgeistmovie.com/For those of you who wish to acquire a better understandingof the mindset of the Rockefellers and the New World Order,here's an interesting interview with Aaron Russo, a personalfriend of the Rockefellers, a major Hollywood Movie Producer(The Rose, Trading Places) and a former candidate for Governorof Nevada who won 26% of the Republican primary vote in 1998. Here's the bio for Russo:http://en.wikipedia.org/wiki/Aaron_RussoAnd here's his interview:http://www.youtube.com/v/7nD7dbkkBIA&hl=en&fs=1For any of you who think this is an anti-Republican,politically slanted rant... think again. There wasonly one candidate for real hope, and change in this election - Ron Paul, and he was squeezed out...http://www.youtube.com/v/-jTpQSLCq_Q&hl=en&fs=1In case anyone hasn't figured it out by now, this entireera of billion dollar, single year incomes by hedge fundmanagers, of $100 million dollar homes, of $50 million dollarbonuses, and nine-figure golden parachutes for CEO's whobankrupted their companies... wasn't created by thesecond coming of the "Industrial Revolution", it was created by "The Great Financial Illusion."We didn't build factories and manufacture "Made in America"goods in which we sold to the rest of the world to earnour new-found prosperity. There are not new auto plants, textile mills, or steel yardsdotting the American heartland as monuments to our newfoundprosperity.Just piles of debt, and mountains of derivatives.We didn't create jobs -- we created CDO's.We didn't increase wages in America -- just credit limits.And we didn't lift the standard of living for the middle class-- we destroyed it.Their's and their children's-children.We've allowed America to be mortgaged, looted, and bankrupted.And now we're allowing them to turn our America intotheir Amerika....the clock's ticking, and there isn't much time people.It's not just time to wake up... it's time to act up.Make no mistake about it - we're at war.At least they are... Sadly, some of us won't figure that out, until historyrepeats itself and the once unimaginable, becomes ourreality.Talk to everyone you know about what's going on in themarkets, and with this country. Don't just call your congressman... get in his, or her damn face the nexttime they hold a town hall meeting. Circulate a petition... get a hundred signatures. That'senough to get attention. Send a letter, send fax's, fax's are easy. And make phone calls. Write an op-ed in your local newspaper - educate people about what's goingon with inflation, with the dollar, with the deficits.Take #$%@'n ACTION people, because at this point in time,talk ain't gonna do it.And say a prayer, because the the lady once calledAmerica... surely needs it.SliderOnTheBlackPS:I know that's a helluva lot of video, and a helluvalot of reading. But, hopefully, if you keep an open mind,it will be worth it. You don't have to watch all the videostonight... but, do come back and watch them later.The "Iraq for Sale" movie (75 minutes), the two videoson "Naked Short Selling" and the historic perspectiveon the Fed from the "Zeitgeist" movie... are must see's.Come back when time permits and watch them in theirentireity... you'll be glad you did....and get engaged, and take action.It's not just your future you're fighting for this time,it's your childrens, and their children's.This is a critical turning point in America's history,it's not conspiracy theory, it's here, and it's now.We've come to a crossroads, and you have to choices...Live in their Amerika, or take our America back.

Must Read Blogs

2008-07-14T10:14:00.001-04:00

Holy cow.

http://www.thesanitycheck.com/

http://www.deepcapture.com/

Oil jumps on OPEC, Libya comments

2008-06-26T11:15:00.002-04:00

And here I thought Kingdom SA had 2M Bbl/d spare production...I though OPEC was trying to talk down oil. With Libya in effect supporting $135 crude....good luck to those thinking/wishing oil would go back to $60. Got oilsands?

Oil jumps on OPEC, Libya commentsThursday June 26, 10:44 am

Oil prices rise sharply as OPEC president says prices could pass $150; Libya may cut output

NEW YORK (AP) -- Oil futures shot up to nearly $139 a barrel Thursday after OPEC's president said oil prices could rise well above $150 a barrel this year and Libya said it may cut oil production.

Light, sweet crude for August delivery rose as high as $138.95 a barrel shortly after the New York Mercantile Exchange opened before retreating some to trade up $4 at 138.55.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said he believes oil prices could rise to between $150 and $170 a barrel this summer before declining later in the year. Khelil said he doesn't think prices will reach $200 a barrel.
The head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.
"Shokri Ghanem, the nation's top oil official, declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration," said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn., in a research note.

Oil futures were also rising as investors reassessed comments the Federal Reserve made Wednesday when it held a key interest rate unchanged. Many investors who had expected the Fed to raise interest rates in August now think a rate hike is unlikely until after the November election or next year, said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Interest rates affect the dollar; many analysts believe the Fed's rate cutting campaign, which began last September, had much to do with weakening the dollar against the euro and sending oil prices skyrocketing. Investors buy commodities such as oil when the greenback is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies.
The dollar slid against the euro after the Fed's comments Wednesday, and was down again on Thursday.

"Breaking through $140 now ... seems hard to avoid," Cordier said.
Retail gas prices, meanwhile, were unchanged overnight at a national average of $4.067, according to a survey of stations by AAA, the Oil Price Information Service and Wright Express. Gas prices have retreated slightly from a record of $4.08 set June 16, but are likely to fall much more as long as crude oil remains in its recent range between roughly $131 and $140.
"If we go through $140, we're at $4.25 on gas within a week," Cordier said.

In other Nymex trading Thursday, July gasoline futures rose 10.69 cents to $3.501 a gallon and July heating oil futures rose 12.87 cents to $3.8779 a gallon. July natural gas futures fell 17 cents to $12.583 per 1,000 cubic feet.