"Sea shore, first lessons, Nantasket Beach, Massachusetts"
Ilargi: Quiet day on the markets, US closed, Britain closed, Europe, Asia and the Euro hardly budging, and all the real action taking place below ground in more ways than one. Bad news from China keeps getting louder, but may still have a ways to go before it makes real headlines. Increasing pressure on Spain, but that too may take a while yet to come to fruition. Spain is not Greece. Even from a purely economical view, the most relevant issue is the Gulf of Mexico, if only because its aftershocks could be strong enough to shake and rattle global economies to an extent no-one seems willing to talk about as of yet.
The five affected US Golf states alone have, between them, a $2.2 trillion economy. Cut that in half, which could easily happen if there’s oil all over the place, and you have a nationwide economic disaster, coming on top of everything else. Throw in a hurricane, or two, or ten, and see where you get from there. How about if 50% or more of Florida's tourist industry is wiped out, or if beach side properties there lose another 50% or more of their value due to tar balls forcing beach closures? How about Georgia, the Carolinas, how about closing Chesapeake Bay as well as Galveston Bay? Alarmist? Maybe, then there’s no end in sight to the spill.
And that too is just the start. There’s a serious threat that the entire Mississippi watershed and river will have to be closed for -much of its- traffic. You can’t have a zillion ships a day drag oil residue all the way up to St. Louis or beyond. Oil is sort of toxic. If it would come to that, the US have a real serious problem.
Anyone still wish to argue that the BP/Macondo/Deepwater Horizon karbunkle is not a disaster? Or that it isn't one for president Obama? After the Top Kill failure (was that ever a serious attempt in the first place? how hard is it to gauge upward vs downward pressure?), there’ll apparently be another brilliantly engineered $multi-million inverted flowerpot theater-piece later this week, but now that we're down to the next in line ever less likely to succeed genius ideas, maybe it’s time to see what for instance the bookies are offering.
After all, they usually have their finger on the pulse of reality much more than politicians or corporations with skin in the game. Or are we down to the lucky 13th failed attempt yet, our best option to date? Someone grab me some clover, horse-shoes, rabbit's feet.
Remember, Matt Simmons, banker to the oil industry and writer of several highly insightful books on black gold, recently warned that it may take 9000 days, or 24 years, before the first oil leak to threaten a US presidency will stop a-gushin’-and-a-flowin’. Simmons has little faith in the litany of maybe-solutions we’ve seen so far and will see going forward. Yeah, there’s talk of detonating a nuclear bomb, but let’s get real, it’s never been tried at these depths, and it’s a crap shot to begin with. What exactly do you risk unleashing?
The people in the swamps, the wetlands and the bayous were never the richest in the world, or even the country, but they had an abundance of natural beauty around them to make up for it. That’s now gone too, for decades to come. It’s impossible to say when Louisiana will recover from this latest blow, but it may very well indeed take those 9000 days, and likely more. Incidentally, so may the lawsuits.
The only thing that will help BP as a going concern retain some of its value is that Exxon and Shell are both eager for a take-over, while China will certainly be looking at the ruins of the company. Then again, for all interested parties the threat of never-ending and extremely expensive legal cases, bot civil and criminal, may be a deterrent that will not be overcome. The British government will try what it can to save the firm, but even they will find they've bigger fish-and-chips to fry. The challenge will be to separate BP's assets from its pending legal claims. A few laws may have to be changed in order to accommodate that one.
When the oil reaches Florida, Georgia, Mexico and Cuba, and it will, every US and UK politician will attempt to wash their hands clean of oil in any shape or form, the president first of all. We’re all still caught in a mid-air suspension moment built on hope that the oil will magically disappear, but that’s not very clever. What we should do is imagine where a Katrina-size hurricane can deliver the stuff. That and the normal loop- and Gulf Stream currents.
So what should both the US and UK governments have done 40 days and change ago? It's simple, really. They should have immediately declared everything they could an emergency zone, situation, whatever, anything in their power. In the US, Homeland Security would have been the number 1 agency to turn to. But they’re probably too occupied with Arab Americans tying their shoelaces in airports.
It’s downright foolish to underestimate the potential damage from an all-out leak over one mile below sea-level, and if you believe it takes platoons of specialists to come to that assessment, I’d direct you to what I wrote right after April 20, and have written since.
Now, I’m not an oil expert, but I do know when things smell too much to ignore. There was and is no-one who could have guaranteed on April 20 that we would find ourselves where we are now, 41 days later, but that’s not the point. What is, is that even people like me could see way back when that the risk was there that we would end up here. And that’s all a president or prime minister should need. When it comes to these matters, the only option is to be better safe than sorry, at least and certainly when you’re in charge of an entire nation. Gambling on anything else, or better, is quite simply not in your job profile. It can’t be, for where would that leave the nation? That’s right, where we are today.
The argument that the White House didn’t and doesn’t have the expertise to intervene in issues such as Deepwater Horizon is ludicrous. If Obama would have, as he should have, declared it a national emergency on April 20, all the best resources, the best people, the best material, on the whole wide planet, would have been available right from the get-go, not just the resources of BP, which has always had a vested interest into downplaying every single aspect of this boondoggle. Unfortunately for every party involved, with the possible exception of BP, governments consciously and deliberately choose and chose to be asleep on both sides on the Atlantic.
And this one looks to be the one that’ll bite them in the rearguard. No more BP, no more Obama, and, much more importantly, no more fishermen and tourist outlets on the Louisiana coast for a long time to come, plus a giant threat to shipping on the Mississippi. And that’s still only the human cost. Do dead dolphins count for anything at all around here?
Could the president have prevented the calamity? Probably not. But that's not the point. The point is he never really tried. He, intentionally or accidentally, misread the situation to a huge degree, one that he can never have back, no matter what his spin team comes up with. The economics behind the karbunkle will tell the tale.
Ilargi: Dear Readers:
At this point in time, we need you more than ever to either donate money directly and/or visit our advertisers. Don’t worry, we have no intention of selling you cheap. On the contrary, we want to, and will, expand TAE to a great extent, tentatively as per July 1. Having to prepare, organize and execute that on a scrape-by budget makes it that much harder. And believe us: we don’t take any of this lightly; we know how close we may be already to the real major economic changes we've long predicted but haven't yet seen. But then, that’s exactly why we feel we have to do more for our readers. Still, hard as we try, hard as we work, it’s just not going to happen without you.
May's Big Selloff Could Be Just the Beginning
by Brett Arends - Wall Street Journal
Are you ready for a lot more turmoil? You had better be -- because there's a good chance that's what you're going to get. Nobody knows for certain, of course. All stock-market predictions need to be taken with a little salt. But there are reasons to suspect that the sudden plunges of the past few weeks may be unhappy omens of what's to come.
Like last week, with stocks lurching wildly with the headlines -- up by triple digits one day, down the next. For the month, the Dow Jones Industrial Average dropped 7.9% and is negative for the year. The Nasdaq Composite and the Standard & Poor's 500-stock index also are in the red for the year. Some pretty smart people are cautious. Seth Klarman at Baupost Group is worried. John Hussman of the Hussman Funds says all sorts of warning lights have lit up across his screen. Even Ron Muhlenkamp of the Muhlenkamp Fund, who usually takes a sunnier view of things, says he has moved a big chunk of his mutual fund into cash in case there's a plunge.
How far will it go? Mr. Hussman says the technical indicators have only been this bad 19 times before in the last half century -- and on average the market plunged about 20% over the following 12 months. When markets were also high, like now, the picture's even worse. Ugh.
Too many people have simply assumed that the last 14 months have been the start of the next boom. But it may have been a typical "bear-market rally" doomed to fall flat on its face. That's what stock-market historian Russell Napier says. He thinks we're in a giant, generational slide that began in 2000 and has several years still to run. We forget that the stock market moves in long, decadal swings. Slumps like those in the 1930s or the 1970s, or in Japan after 1990, weren't simple, straight-down affairs. They were punctuated by huge "sucker" rallies that eventually faded away. But, over all, the market bounced along sideways, or down, for a decade or two.
Two Decades?
The slide that began in 1969 didn't end until 1982. The slump after 1929 didn't give way until the late 1940s. Japan's gloom is still with us. In general, the bigger the bull-market boom, the bigger and nastier the bear market that follows. The bull market of the '80s and '90s was the biggest on record. So expect the bear that follows to be ugly and tenacious. Mr. Napier has studied the big stock-market grizzlies of the past. Generally speaking, they took a long time to die, and didn't do so until shares got really, really cheap. March 2009? Not even close.He fears Wall Street could fall by half, or worse, over the next four years before this bear is finally slain. Very few are that apocalyptic. But plenty fear more choppy times to come. As one respected fund manager told me not long ago, Wall Street had spent too many years overvalued, from 1994 through 2008, for last year to mark the end of the reckoning. Either way, stock markets today simply look too high. Based on certain long-term measures -- such as comparing share prices to asset costs or normalized profits -- Wall Street could be as much as 50% overvalued.
And then there's the economic backdrop. It's not just the headline news out of Europe that has gotten people spooked. The problems are deeper. This recession wasn't a normal one, so the recovery probably won't be either. This slump wasn't caused by the economy "overheating," but by overborrowing -- on a massive scale, and over many years. It took place here, and in many countries around Europe, too.
Debt Hangover
The debt levels are without precedent. The bailouts have transferred a lot of private-sector debt to the public sector. But that's just moving the problem around. The debt leaves a terrible drag on the economy as people try to save. And it is putting some countries' financial stability in question. Inflation may yet come in due course. But Van Hoisington, a veteran bond manager from Austin, Texas, recently warned that the more imminent danger might be deflation -- falling wages and falling prices. This is what has hammered Japan all these years. It's what turned the Crash of 1929 into the Great Depression. Deflation makes debts bigger in real, purchasing-power terms.
Where does that leave the regular investor? Take a hard look at what you own, and what sort of downturn you think you could handle. Too many investors -- and too many financial advisers -- are still running with the bull-market playbook: Take on risk; stay fully invested; buy the dips; equities always outperform. Maybe it will work again -- if we have another bull market. Are you really willing to bet your stack on that happening now?
A lot of very risky assets have boomed in the past 14 months. Investors in things like high-yield bonds and small-cap stocks have had a great ride. But if you couldn't stomach another plunge, you may want to scale back. On the other hand, one should never get too gloomy. As a wise fund manager once told me, "Just remember, the economic fundamentals always look terrible!" And right now some blue-chip stocks -- here and overseas -- offer reasonable values. They may offer a good trade-off between risk and reward in this environment.
3,000 Pages of Financial Reform, but Still Not Enough
by Gretchen Morgenson - New York Times
For decades, until Congress did away with it 11 years ago, a Depression-era law known as Glass-Steagall ably protected bank customers, individual investors and the financial system as a whole from the kind of outright destruction we’ve witnessed over the last few years.
Glass-Steagall was a 34-page document. The two bills that the Senate and the House are currently chewing over as part of what may be a momentous financial reordering weigh in at a whopping 3,000 pages, combined.
Yet despite all that verbiage, there are flaws in both bills that would let Wall Street continue devising financial black boxes that have the potential to go nuclear. And even if the best of both bills becomes law, investors, taxpayers and the economy will remain vulnerable to banking crises. Some will argue that these bills, at around 1,500 pages each, have to be weighty and complex if they are to curb the ill effects of convoluted and inscrutable financial instruments. That makes it doubly disappointing that the bills don’t go far enough in bringing greater transparency and better oversight of everyone’s favorite multisyllabic wonderment these days: derivatives.
Certainly the banks and the Wall Street trading shops that have so richly scored in the derivatives market are happy to keep the status quo — after all, profits flourish where opacity rules. But for most of the rest of us that’s an unsatisfactory, and possibly dangerous, outcome. Despite their ubiquity and the pivotal role they play in modern finance, many derivatives don’t trade openly on exchanges as stocks and other instruments do. When an institution buys a derivative like a credit-default swap, for example, to protect itself against the default of an investment like a bond, that transaction is a private contract, struck between it, the seller and perhaps an intermediary, like a bank.
Because private transactions like these can mask big and risky exposures in the markets (think American International Group), financial reformers decided to make derivatives trading more transparent, which is a good thing. Both the Senate and House bills require standardized derivatives to be traded on an exchange or a swap execution facility. But the devil is always in the details — hence, two 1,500-page bills — and problems arise in how the proposals define what constitutes a swap execution facility, and who can own one.
Big banks want to create and own the venues where swaps are traded, because such control has many benefits. First, it gives the dealers extremely valuable pretrade information from customers wishing to buy or sell these instruments. Second, depending on how these facilities are designed, they may let dealers limit information about pricing when transactions take place — and if an array of prices is not readily available, customers can’t comparison-shop and the banks get to keep prices much higher than they might be on an exchange.
Nobody lets auto dealers, airlines, hardware stores or an array of other businesses sell their wares without a price on the window, the ticket or the tag, but Wall Street is still getting away with obscuring prices in the derivatives market. To resolve problems that might arise from derivatives dealers controlling trading facilities, the House bill bars them from owning more than 20 percent of a swap facility. The Senate bill, however, has no such limitations. It is unclear, therefore, what the final bill will allow on this crucial matter. What is certain is this: Banks will lobby hard to be allowed to own swap facilities.
Another part of the Senate bill that keeps derivatives markets opaque resulted from a tiny change in the proposal’s original language. Initially, the Senate bill’s discussions of derivatives platforms defined them as “trading” facilities, a term of art from the Commodity Futures Modernization Act of 2000. In that law, a trading facility refers to a system in which multiple participants place bids and offers and in which price transparency exists both before and after a trade is made. Such a definition usually excludes making deals over the telephone because negotiating on the phone may not provide access to as many different prices as an exchange does.
But the word “trading” was eventually struck from the final Senate bill’s definition of derivatives platforms. That change would allow dealers to make derivatives deals over the phone, hardly a victory for transparency. Dealers love trading by phone because it makes it harder for customers and investors to see prices and comparison-shop, which, of course, bolsters dealer profits. Because the House bill never specifically took on the issue of “trading” facilities, it is unlikely that the reconciliation of the two proposals will bring back this important distinction — leaving derivatives trading more opaque than it should be.
Finally, lawmakers who are charged with consolidating the two bills are talking about eliminating language that would bar derivatives facilities from receiving taxpayer bailouts if they get into trouble. That means a federal rescue of an imperiled derivatives trading facility could occur. (Again, think A.I.G.) Surely, we beleaguered taxpayers do not need to backstop any more institutions than we do now.
According to Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, Va., only 18 percent of the nation’s financial sector was covered by implied federal guarantees in 1999. By the end of 2008, his bank’s research shows, the federal safety net covered 59 percent of the financial sector. In a speech last week, Mr. Lacker said that he feared we were going to perpetuate the cycle of financial crises followed by taxpayer bailouts, in spite of Congressional reform efforts.
“Arguably, we will not break the cycle of regulation, bypass, crisis and rescue,” Mr. Lacker said, “until we are willing to clarify the limits to government support, and incur the short-term costs of confirming those limits, in the interest of building a stronger and durable foundation for our financial system. Measured against this gauge, my early assessment is that progress thus far has been negligible.”
Negligible progress, 3,000 pages notwithstanding.
Fears Rise in Europe Over Potential for Deflation
by Jack Ewing - New York Times
If the European Central Bank has one monetary dragon it considers essential to slay, it is inflation. Keeping inflation under control is the central bank’s primary legal responsibility, and as Europe struggles to overcome economic problems caused by the sovereign debt crisis, inflation has remained the bank’s primary focus. But some economists say it has become a driving obsession that has blinded the bank to a potentially bigger threat to Europe: deflation.
The central bank’s doubters grew louder after it made a big show of taking measures to cancel out the supposed inflationary impact of the government bond purchases it began on May 10 to help keep Greece and several other euro zone countries from defaulting on their debts. “It’s nuts: how can they be concerned about the inflationary impact of this?” said Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, N.Y. “If I were the head of the E.C.B., I would be printing money to avert the decline in the money supply.”
Many economists regard deflation as more dangerous than inflation, because it prompts consumers to delay purchases as they wait for lower prices, creating a downward spiral of lower demand and production. Deflation is also bad for debtors like Greece, because they may have to pay back money that would be worth more than it was when they borrowed it. Economists like Mr. Weinberg — and a few policy makers as well — are beginning to worry that a danger of deflation in Europe, similar to the one that strangled Japanese growth for most of the 1990s, is a bigger threat than inflation.
Prices fell in Ireland in April, while inflation was below 1 percent in five other euro zone countries. The problem also extends outside the euro zone. “We all share some risks and problems in common with Japan circa 1995,” Adam S. Posen, a member of the Bank of England’s monetary policy committee, told an audience at the London School of Economics on May 2.
The United States is also at risk, Mr. Posen said, though he rated the chances of deflation there as low. But just as Japan did in the 1990s, the European Central Bank and the United States Federal Reserve have cut interest rates close to zero while pumping huge amounts of credit into their economies. That means the two central banks would have limited policy tools left with which to combat a collapse in prices and demand. The downward pressure on prices has its roots in the economic decline that followed the 2008 financial crisis, but Europe’s sovereign debt problems are likely to add extra impetus. Governments, including those of Spain and Germany, are sharply reducing spending to lower their deficits, which will inevitably curb consumer demand and employment, hindering growth.
Inflation in the euro zone — the 16 countries that use the euro — rose slightly in April, to an annual rate of 1.5 percent, from 1.4 percent in March. Declines in categories like recreation and culture, communications and vacation tour packages blunted the impact of higher transportation costs. And so-called core inflation — which excludes energy prices and which most economists consider a better measure for policy-making purposes — declined to 0.7 percent in April from 0.8 percent in March.
By either measure, the overall rate was still well below the central bank’s target of about 2 percent. The real challenge for policy makers will occur in the coming months and years as Spain, Greece and Portugal struggle to regain their competitiveness on international markets. Without their own currencies to devalue, they have little choice but to cut wages and keep them well below those in countries like Germany and France. Pay cuts and lower government spending will put downward pressure on prices. Spanish core inflation already turned negative in April.
A mild decline in prices in a few euro zone countries can be managed, economists say, but it will add to the risks of deflation. And the central bank will face more difficulty than usual in devising a monetary policy that fits both the ailing countries and the faster-growing economies like Germany and France. “The E.C.B. has a careful balancing act to do,” said Dennis Snower, president of the Kiel Institute for the World Economy in Germany.
The central bank has remained firm in its focus on containing inflation. Jean-Claude Trichet, the bank’s president, has said he considers inflation a tax on the poor. And the bank’s charter obliges it to serve foremost as guardian of price stability. As recently as Friday, Lorenzo Bini Smaghi, a member of the bank’s executive board, defended the wisdom of the mandate. In a speech in Rabat, Morocco, he said permitting inflation to rise to make it easier for European nations to repay their debts, as some have urged, would backfire. The resulting decline in the value of government bonds would inflict “major losses on the banks and financial institutions which have been heavily investing in these markets, potentially undermining the recovery,” he said.
Nevertheless, Mr. Trichet has been under fire, especially from critics in Germany, ever since the central bank began the unprecedented bond purchases to halt a sell-off of Greek, Portuguese and Spanish government debt. By buying government bonds on the open market, and being coy about how much it was spending, the bank was able to reduce the high premiums investors were demanding for debt from the weakest countries. A continuation of the market rout would have raised the interest rates that Spain and other countries had to pay to sell new bonds, aggravating their already grave fiscal problems.
The problem was that, to buy the bonds, the bank had to expand the assets it held on its books. So to prove that it had not stooped to printing money, the bank promised to offset the bond purchases, which totaled 26.5 billion euros ($32.6 billion as of May 24, the most recent data available), by taking in a like amount in short-term deposits from banks. In effect, it siphoned off as much liquidity as it had added. The bond purchases were only the latest of a series of extraordinary moves that Mr. Trichet has pursued to stabilize the European banking system. Since the beginning of the financial crisis, the central bank has been essentially keeping banks afloat by providing almost unlimited loans at 1 percent interest.
Mr. Trichet is eager to squash any doubts that such moves represent a shift in the bank’s focus on inflation, said Mr. Snower of the Kiel Institute. “The E.C.B. is showing very clearly that its objectives have not changed.” Other economists say that scale of the bond purchases would not increase the money supply enough to pose an inflation risk. And the money supply is falling because of a decline in bank lending. In addition, factories are operating below capacity and euro zone unemployment is at 10 percent. Extra money in the system would not create scarcities of goods or labor that could drive up prices, Mr. Weinberg of High Frequency Economics said. “You don’t have to pay any more to get those workers to come out of unemployment,” Mr. Weinberg said.
The recent decline of the euro against the dollar could create some inflation. Oil and other commodities are priced in dollars and could become more expensive in euros. Still, few economists see prices rising. “There is no reason to fear high inflation for the time being,” Simon Junker, a Commerzbank analyst, said in a note. Much of Mr. Trichet’s anti-inflation stance seems aimed at mollifying Germany’s anxiety over the bank’s bond purchases. After the purchases, Mr. Trichet gave interviews to three leading German publications, an unusually high number in such a short period. In each case, he tried to reassure Germans on inflation and convince them that the euro is as solid as the German mark that they reluctantly gave up 11 years ago.
The Ten Wealthiest Financiers in America Are Not Worth $900,000 an Hour
by Les Leopold - Huffington Post
Dear Messrs, Tepper, Soros, Simons, Paulson, Cohen, Icahn, Lampert, Griffin, Arnold and Falcone,
It's now estimated that about 150,000 teachers will lose their jobs next year because of the financial crisis touched off by your industry. On behalf of the 3 million young people who would have been their students, I have a proposition for you: Donate 50 percent of your 2009 earnings to keep those 150,000 teachers in their classrooms. Each of you, on average, still would net over $935 million dollars for the year (you should be able to scrape by on that) -- and the money you'd forgo would ensure that 3 million kids would get an education.
That the ten of you personally received $18.7 billion (not million) from your hedge fund proceeds in 2009 is quite a feat, given that it was the worst economic year since the Great Depression. You each got roughly $36 million a week -- over $900,000 an hour! Meanwhile, as result of the Wall Street shenanigans you helped engineer, 29 million Americans are now without work or forced into part-time jobs.
While you may not feel personally responsible for the crash, you do bear some responsibility since you are major players in the financial industry. (Funny how no one is accepting responsibility for the financial crisis.) As Leo Hindery Jr. put it, your industry is a "profit-driven, greedy, selfish institution that, with its unbridled compensation practices and current light-touch regulatory regime is, I truly believe, behind almost every major societal and economic ill that has befallen the United States since 1980."
As you know, you probably would have earned little or nothing in 2009 if the American taxpayer hadn't bailed out the entire financial system. That $18.7 billion you collected didn't fall from the sky. Fearing another great depression, we poured nearly $10 trillion into the financial sector in the form of loans, liquidity programs, asset guarantees and the like. Those taxpayer subsidies should have gone to enhancing the public good, not pumping up obscene levels of private gain. Instead the net result of our mammoth rescue effort is that 150,000 teachers are laid off while you collect more than $36 million a week.
It's a troubling saga of public decay: Your high-flying financial manipulations helped bring down our economy. Millions of people lost their jobs and were no longer able to pay taxes; businesses everywhere went under. And now state and local governments are going broke and slicing their budgets. Tens of thousands of teachers are losing their jobs. (Those of you who live in New Jersey are watching this play out with a vengeance, as school programs are slashed to the bone.) Meanwhile, you walk away with billions, courtesy of U.S. taxpayers.
I challenge you to explain this story to your children or to anyone else who isn't on your payroll. How can you justify making more than $900,000 an hour in an industry that is essentially responsible for the loss of 150,000 teachers?
Not to pick on you, Mr. Tepper, but you led the list by earning $4 billion in 2009. That's more than $1.9 million an hour, or $32,000 per minute. You earn more in one minute than the average entry-level teacher earns in one year! Please explain. You personally can do something about this insanity. You can prevent the further deterioration of our public educational system. You can let America know that you are willing to right a wrong.
You know better than anyone else in the country how truly fortunate you are. And you know that you can easily afford to put thousands of teachers back to work, shoring up the public educational system that is at the core of our democracy. And let's be honest, you can cough up $9 billion and still be wealthier than the pharaohs.
In a saner world, we would have placed a 50 percent windfall profits tax on all financial earnings in 2009. That would have helped compensate for the massive public subsidies we provided to your industry. It would have replenished our local, state and federal coffers. But as a nation we are cowed by financial power. We simply do not have the will to challenge our distorted distribution of wealth -- at least not yet. However, with the stroke of a pen, you can help rebalance the scales.
In truth, I don't expect you to rise to this challenge. I suspect that if you see this letter, you will come up with a thousand and one reasons to dismiss my request. Some of you might point out that you are already giving hundreds of millions to charities and educational institutions. Or maybe you'll just be miffed that someone like me has the gall to make such an outrageous proposition. But it's not me that you need to think about. You need to think about those 150,000 teachers and the 3 million kids who won't be learning from them next year. Your wealth will have little value if the society around you crumbles.
The time may come when the American people demand a modicum of financial justice and economic sanity. This would require something far beyond the current financial reform, which is basically a gift to Wall Street and your hedge funds. (After all, under this legislation, you'll still be able to pay only 15 percent tax on your earnings, which is virtually criminal given our revenue shortfalls.)
The time may come when we stop allowing financiers to earn billions while we gut our public infrastructure. I don't know when that will be or how we'll get there. But if you keep piling up your billions with no concern for the American people, you might just hasten the day when an angry and determined public comes knocking on your door. Better you should put our teachers back to work. No?
P.S. If you employ those 150,000 teachers, I'll donate the royalties from my latest book, The Looting of America. After all, you're part of the reason the book keeps selling.
100,000 American teachers nationwide face layoffs
by Nick Anderson - Washington Post
Senior congressional Democrats and the Obama administration scrambled Wednesday to line up support for $23 billion in federal aid to avert an estimated 100,000 or more school layoffs in a brutal year for education budgets coast to coast. As early as Thursday, the House Appropriations Committee expects to take up a bill that couples the school funding with spending for the Afghanistan war -- a measure that has bipartisan support. But a parallel push in the Senate stalled this week after a leading proponent concluded that he couldn't muster enough votes to surmount Republican opposition.
"We desperately need Congress to act -- to recognize the emergency for what it is," Education Secretary Arne Duncan said Wednesday on Capitol Hill. "We have to keep hundreds of thousands of teachers teaching." Republicans and some Democrats say the government can't afford an extension of last year's economic stimulus that would add to the federal deficit. The stimulus law kept many school budgets afloat with $49 billion in direct aid to states and billions of dollars more for various programs.
But the stimulus funding is trailing off before state and local tax revenue can recover from the recession. Skeptics of a new education jobs fund point out that the teaching force in recent years has grown faster than enrollment, with schools adding instructional coaches and reducing class sizes. "Giving states another $23 billion in federal education money simply throws more money into taxpayer-funded bailouts when we should be discussing why we aren't seeing the results we need from the billions in federal dollars that are already being spent," said House Minority Leader John A. Boehner (R-Ohio).
How many of the estimated 3.3 million public school teachers nationwide will lose their jobs remains unknown. Duncan often says 100,000 to 300,000 education jobs are at risk, including support staff. Teachers unions have put the layoff threat in the range of 160,000 -- including 9,000 in New Jersey, 16,000 in New York and 36,000 in California. Most Washington area school systems plan relatively few layoffs but are squeezing costs, with Fairfax County scrapping most summer school, for example, and Montgomery County increasing class sizes in elementary grades.
The National Education Association, the largest teachers union, said Wednesday that it is funding TV ads in markets that are home to potential swing votes among House Democrats. The ad features children dressed in business suits pleading for a school bailout similar to what bankers received. If the House approves the measure, proponents hope to overcome Senate obstacles. Sen. Tom Harkin (D-Iowa) had expected to offer the school funding proposal for a Senate vote but dropped that plan Tuesday. Harkin said he had majority support but not the 60 votes needed to beat a filibuster. He said he would seek to include school aid in a final version of the war spending bill negotiated with the House.
Proponents say they also may need President Obama to speak out and twist arms on Capitol Hill on behalf of schools. Deficit spending has become a tougher political sell since enactment of the stimulus law early in Obama's term. Democrats are on the defensive in an election year, and the president has signaled that he wants to do more to rein in spending. California is ground zero for the school budget crisis. The most populous state, with a budget deficit of $19 billion, is shedding summer school, music and art classes, bus routes, days from the school year, and yet-uncounted thousands of teachers. The proposed aid could give the state $2.8 billion in relief.
Independent analysts say the state has one of the leanest education budgets in the nation. Its Department of Education estimates that state and local funding per student is down 15 percent over three years. To reduce layoffs, Los Angeles cut five days from the school year; San Francisco cut four. At El Dorado Elementary School in San Francisco, kindergarten teacher Jennifer Moless grew fed up with all of the pink slips. She took some construction paper -- pink, naturally -- and markers and drew up her own messages.
The testimonials were hanging this month in the hallways: "Provides hot tea to thirsty, sniffling colleagues. . . . Tutors students after school. . . . Organizes many of our family events. . . . Collaborates with teachers across the district. . . . Will be pink-slipped. . . . We need you! Save El Dorado!" Many of the school's 300 students come from public housing and qualify for free or reduced-price meals. But 11 out of 15 classroom teachers received preliminary layoff notices in March. That's a frequent result of rules that base layoffs on seniority.
"Higher-needs schools are hit inequitably," said Moless, 33, in her third year in the San Francisco district. "They're taking the worst of the cuts." Moless, who received one of the pink slips, said she is doubly upset because she just bought a house nearby. "This is my neighborhood."
Teacher layoff projections have dwindled in San Francisco from 700 to 350 to 195, pending ratification of a labor agreement that includes furloughs. Seniority will determine who stays and who goes. El Dorado Principal Tai-Sun Schoeman said last week that seven teachers who received preliminary pink slips are likely to get reprieves, including Moless. But if that is what it means to be "saved," the school is hardly celebrating: At least four teachers are likely to be laid off. Methinee Thongma, 33, came to the school last year to teach first grade after having taught for several years in Fresno. She has no seniority and, quite possibly, no job come summer. She has hunted for work since March. "There aren't really a lot of jobs out there," she said.
France’s AAA rating ‘could be a stretch’
by Nic Fildes - London Times
France has added a new note of caution to the European debt crisis and admitted that it could struggle to keep its top-notch credit rating. François Baroin, the French Budget Minister, told local television stations that holding on to the country’s AAA rating would be a “stretch”. The rating does not look to be in immediate danger of a downgrade, but the comments came only two days after Fitch downgraded Spain’s credit rating amid concerns about its economic growth.
European and Asian investors will get their first chance to react to the downgrade, announced after the close of European trade on Friday, when markets reopen today. Mr Baroin toned down his comments later and said that the Government was committed to the “demanding” target of maintaining France’s top credit rating. A ratings cut pushes up the interest that a country must pay on its debts and thus has a knock-on effect on its economic growth.
France expects its budget deficit to grow to 8 per cent of GDP this year and it intends to reduce that to 3 per cent within three years. The Government has frozen public spending and intends to increase the retirement age and reform the pension system to reduce its debt. Germany, meanwhile, has hinted that it may increase value-added tax on some items to bring down its budget deficit.
The Spanish downgrade is the latest blow to the eurozone, which is struggling to cope with the fallout from the Greek fiscal crisis. The debt crisis has hit stock markets and hammered the euro over the past two months, despite attempts to create a financial safety net for embattled countries.
Spain is trapped in a 'perverse spiral' as wage cuts deepen the crisis
by Ambrose Evans-Pritchard - Telegraph
The Spanish Inquisition used to burn Englishmen in Sevilla's Plaza de San Francisco when they had the chance. There must have been some nostalgia for this practice when the news hit that Fitch Ratings had stripped the country of its AAA status.
The downgrade could not have come at a more dreadful moment. The EU's €750bn "shield" for eurozone debtors has halted an incipient run on Club Med banks, but it has failed to restore full confidence for the obvious reason that such a guarantee cannot plausibly be extended from Greece to Portugal and then to Spain. The sums are too large, the number of solvent creditors too reduced, the intra-EMU politics too poisonous.
Pierre Lellouche, France's Europe minister, compares the shield to NATO's Article 4, the mutual defence clause that deems an attack on any one state to be an attack on all. Leaving aside the question of whether Nato's Article 4 was ever credible e_SEnD I doubt it was e_SEnD this use of NATO language illustrates the confusion in EU circles over the causes of the Club Med bond crisis. This is not a war. It is a beauty contest. Eurozone states must attract capital from pension funds and Asian central banks to finance their deficits or default.
Whether intended or not, Mr Lellouche may have pulled the detonation plug on EMU by boasting that Europe's politicians had created an EU debt union on the sly. "It is expressly forbidden in the treaties. De facto, we have changed the treaty," he told the Financial Times. How will that go down at Germany's constitutional court, already facing a growing in-tray of claims that these bail-outs breach the Maastricht Treaty?
For Spain it has been a horrible week. The central bank seized CajaSur and imposed draconian write-down rules on banks to restore confidence. The Spanish Socialist and Workers Party (PSOE) of Jose Luis Zapatero then rammed a 5pc cut in public wages through the Cortes by a single vote, shattering consensus. The government cannot hope to pass a budget. Its own trade union base is planning a general strike.
The sub-text of Fitch's 32-page report shows Mr Zapatero's self-immolation to be futile in any case. The agency has not downgraded Spain for lack of austerity. Its implicit conclusion is that the policy of 1930s wage cuts - or "internal devaluations" - being imposed on southern Europe's humiliated states as a quid pro quo for the EU shield is itself part of the problem. Ultra-austerity will bleed the economy, shrivel tax revenues and fail to close deficit anyway. "Fitch believes the risk that economic growth will fall short of the government's projections," it said.
El Pais spoke of a "perverse spiral" in its editorial. "The Fitch note drives home the apparently unsolvable contradiction in which the Spanish economy finds itself. To maintain debt solvency Spain must squeeze public spending: yet this policy undermines the chances of recovery which itself causes further loss of confidence." Spain's unemployment was already 20.5pc even before this latest dose of shock therapy.
There are 4.6m people without work. Dole payments alone account for half the budget deficit. By comparison, the Anuario Estadístico shows that Spain's unemployment never rose above 9.5pc during the Great Depression . The economy shrank by 3pc from peak to trough. The Zapatero slump is worse than anything inflicted by Gil Robles during the Bienio Negro.
It is no mystery why Spain is trapped in depression. The country joined the euro without grasping its Faustian implications, as did others. Germany was equally naive in thinking it could have a currency union entirely on its own terms. EMU caused Spanish interest rates to halve overnight, with dire results as the Bank of Spain's governor confessed in April 2007. "The single monetary policy has meant that excessively loose conditions for our economy have been almost continuous," he said.
Real rates were -2pc as the bubble reached its crescendo. Nearly 800,000 homes were built in 2007, more than in Britain, Germany, and Italy combined. There is now an overhang of 1.6m unsold properties, six times the level per capita in the US. Total public/private debt has reached 270pc of GDP. The boom was a debt illusion, just as it was in Britain but with the added twists of lower wealth to offset household debt and a global investment position that is underwater by 70pc of GDP.
Britain still has the instruments to extricate itself. The Bank of England has engineered a devaluation of 20pc, restoring competitiveness at a stroke. Spain can try to claw back an even greater loss by cutting wages, but that risks a slow death by debt-deflation as compound interest tightens its vice.
This can end only in two ways. Either Germany tolerates massive monetary reflation by the ECB or Spain will be forced out of EMU, setting off a catastrophic chain-reaction through north Europe's banking system. Your choice, Berlin.
Spain Socialists face deep crisis as support dives
by Paul Day - Reuters
Spain's Socialist government grappled with a deepening political crisis on Sunday, with reforms of a "dysfunctional" labor market hanging by a thread and its chances of survival beyond the autumn looking shaky. Weekend opinion polls showed Prime Minister Jose Luis Rodriguez Zapatero's government far behind the opposition, and that many voters believe he will have to call early elections as support for a 2011 austerity budget will be hard to muster. "The government faces not only an economic crisis, but a political crisis too because the way it's governing is not good enough," said Angel Laborda, an economist at Spanish savings banks consultancy FUNCAS. "I believe that early elections will be called, sooner or later."
Spain's Socialists are battling to prove to nervous world markets the euro zone's fourth largest economy will not go down the same path as Greece, but with growing political opposition at home their ability to push through reforms is limited. Zapatero's problems, as he battles soaring unemployment and tries to avoid a Greek-style debt crisis, are immediate. A deadline for the government, trade unions and business to agree on labor reforms, aiming to cut unemployment and make the Spanish economy more competitive, looms in the coming week. Government debt is also likely to take a drubbing when bond markets reopen after a ratings downgrade late on Friday.
Extaordinary Speed
A poll conducted for El Mundo newspaper by Sigma Dos showed on Sunday that the opposition Popular Party (PP) would take 45.6 percent of the vote if an election were held now, 10.5 percentage points ahead of Zapatero's Socialists.
The Socialists held a 3 point lead over the conservative PP at the March 2008 general elections. But their handling of the economic crisis and unemployment, which has more than doubled to 4.6 million since then, has gutted their support. The right-of-center El Mundo said the pace of their loss of support stood out. "What is so extraordinary is the speed at which its happened as if Zapatero's whole plan had suddenly imploded and he himself had fallen from his pedestal," it said. Another opinion poll in the El Periodico newspaper on Saturday put Zapatero's party 8 percentage points behind the PP.
Conducted May 25-27, the Sigma Dos poll followed the government's announcement of an additional 15 billion euro ($18 billion) austerity plan imposing pay cuts on civil servants and freezing welfare handouts. This week's most pressing problem is the labor reform talks. Already one deadline set for May 31 has been pushed back a week. If the talks fail, the government says it will propose its own changes by a cabinet meeting on June 11, risking a confrontation with the unions.
In a report last week, the International Monetary Fund listed "a dysfunctional labor market" as being among Spain's many severe challenges. The tripartite labor talks -- considered by economists as vital to dealing with 20 percent unemployment and unproductive and uncompetitive workforce -- remained deadlocked this weekend. The unions, traditionally close to the Socialists, have said they will respond to any imposed reform with a general strike.
Spanish debt faces a sharp drop on international markets after Fitch rating's agency downgraded Spanish sovereign debt to one point below top on Friday evening. The spread of the Spanish 10-year bono against the German bund has risen to 156 basis points from around 80 in mid-April as doubts grow about the Spanish economy. "The political crisis is completely reversing any positive effects the austerity measures could have, because it's hitting the investors confidence more than the possible benefits of the measures themselves," said Laborda.
Parliamentary Support
The government has promised to cut the deficit from 11.2 percent of gross domestic product to 3 percent of GDP by 2013, but Zapareto is having trouble raising parliamentary support. The 15 billion euro austerity plan scraped through parliament by just one vote on May 27, prompting speculation that Zapatero may be forced to call early elections if his 2011 budget proposal, due in September, is rejected.
According to the El Mundo poll, half of Spaniards expect general elections to be brought forward from 2012, and the PP and Catalan party CiU have already called for early elections. Without an absolute majority in parliament or support from either the PP or the CiU, Zapatero's only way to avoid a vote of no confidence will be win backing from small parties such as the Basque Nationalist Party (PNV) to pass the budget. The Basque Nationalists were pivotal in passing the 2010 budget and a first round of budget cuts. But they voted against Zapatero's austerity plans on Thursday and the government will need to offer a handsome incentive to get them back on board.
Spain's Savings Banks Bow to the Inevitable: Mergers
by Jonathan House - Wall Street Journal
In a tumultuous seven days, 12 of Spain's 45 savings banks have begun merger talks and a 13th has been rescued by the central bank. The troubled sector, which had long resisted government pressure to merge, now is bowing to the inevitable, hastened by the Bank of Spain's willingness to take over ailing lenders and by new rules it has proposed that would require all Spanish banks to speed up the recognition of losses from bad loans.
The savings banks, or cajas, are bearing the brunt of the collapse of Spain's decade-long housing boom. Their worsening finances come at the same time that international investors are jittery about the government's fast-rising debt. Friday, Fitch Ratings cut the country's triple-A credit rating by a notch after European markets had closed, adding to the pressure on an already weakened euro and likely to push down the Spanish stock market on Monday. Also Friday, Spain's two largest savings banks, Barcelona-based La Caixa and Caja Madrid, announced separate merger plans with some of the country's weakest savings banks. Both are considered to be financially sound, and are expected to accelerate the consolidation process.
Combined with the tougher line from the Bank of Spain, "this points to a phase of mergers likely to occur at an increasing pace in coming weeks," said Giada Giani, an economist at Citigroup in London. The government, too, is upping the pressure. Finance Minister Elena Salgado on Friday reiterated her government's intention to clean up the cajas by the end of June, the European Commission's deadline for the use of a state-funded bailout vehicle. Ms. Salgado said Spain had no plans to request an extension from Brussels, as other countries have done.
Until recently, the clean-up had advanced slowly. The government's Fund for Orderly Bank Restructuring, known by its Spanish acronym FROB, encourages stronger institutions to take over weaker ones by offering them funds to cover some of the bad debts they are taking on. Nearly a year after its creation, the bailout fund is about to make its first payouts, to Caixa Catalunya and Caixa Sabadell, which have each spearheaded mergers with weaker savings banks. Industry officials believe the clean-up process will be accelerated now that La Caixa and Caja Madrid are involved.
La Caixa, the country's third-largest financial institution by assets behind Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, previously had shown little interest in taking over leading lenders. On Friday, La Caixa said it had entered merger talks with Caixa Girona, a small caja that Fitch downgraded last week to just a couple of notches above junk territory, citing the impact of the weak Spanish economy and property sector as well as margin pressure. About 38% of its loan book is tied to the real-estate and construction sectors, according to Fitch.
Caja Madrid, the country's fourth-largest financial firm, said it will merge most operations with five smaller cajas—Caja de Ávila, Caja Insular de Canarias, Caixa Laietana, Caja Segovia and Caja Rioja—although each will maintain their brands. The combined firms would be smaller than the the La Caixa-Caixa Girona tie-up. In the past week, Caja de Ahorros del Mediterráneo, Spain's fourth-largest savings bank; Cajastur, Caja Extremadura and Caja Cantabria said they intend to merge. That announcement came two days after the Bank of Spain said it is taking over CajaSur after the lender couldn't agree on merger terms with Unicaja, another savings bank.
Most observers believe the Bank of Spain's recent moves will spur more consolidation as ailing cajas scramble to avoid being taken over by the central bank—with the accompanying threat of legal action against for their managers—and to guarantee their solvency after being forced to recognize losses more quickly. The central bank has proposed that Spanish lenders set aside provisions for the full value of each bad loan one year after it has soured. Banks currently provision gradually over a period between two and six years. The Bank of Spain also raised provisioning requirements for real-estate assets that lenders hold on their balance sheets.
For the government, the clean-up of the cajas is one of its three biggest problems, along with a double-digit budget deficit and a 20% unemployment rate. Fitch's downgrade of Spain's credit rating to double-A-plus, the second-highest possible ranking, moves the firm's view closer to that of Standard & Poor's Ratings Services, which cut Spain's ratings to double-A in April. The third major ratings firm, Moody's Investors Service Inc., in early May said it maintained its maximum triple-A rating with a stable outlook.
Fitch's move came just a day after Spain's government passed austerity measures for this year and the next, aiming to cut a budget deficit that has reached a double-digit percentage of gross domestic product despite the measures' likely effect of slowing economic growth. The Spanish government Friday lowered its forecasts for GDP growth in 2012 to 2.5% from 2.9%, and for growth in 2013 to 2.7% from 3.1%. Fitch said it expects the "inflexibility" of labor markets and restructuring of the nation's banking sector will hinder efforts to stabilize Spain's economy. It also said it expects the economic recovery will be more muted than Spain's forecasts project.
Beijing in a sweat as China's economy overheats
by Peter Foster and Adrian Michaels - Telegraph
China is struggling to contain the threat of an overheating economy in the face of rising house prices, inflationary wage increases and a continuing surge in money supply, the head of the country's second-largest bank has warned. Guo Shuqing, chairman of China Construction Bank, said that the latest figures for China's M1 money supply a key predictor of inflation had raised concerns that the country's vast stimulus and bank-lending was running too hot. "I saw the figures for last month and M1 is still very high, increasing 31pc from last year, which is one per cent higher than last month," he said in an interview with The Daily Telegraph.
"We are seeing a lot of money coming to China which is creating a current and capital account surpluses." China's regulators have introduced a raft of measures in recent weeks in an attempt to cool down the economy, forcing banks to raise the capital adequacy ratios and hitting second home buyers with regulation designed to drive speculators out of the property market. However, Mr Guo warned that the effectiveness of measures to cool house prices, which have risen by up to 40pc this year in some major cities, could be blunted by the massive reserves of cash still being held by private developers. "Sales are falling but prices are not," he said. "Developers have a lot of cash, so they're not too concerned at the moment."
"Property prices are definitely seeing something of a bubble, but it differs from city to city. You can see prices going very high on the coastline, but in the inland areas and western areas, even in provincial capitals, it's still not so high." China has moved quickly to apply the brakes after first quarter figures showed the economy expanding at 11.6pc year-on-year, driving down sentiments on the country's benchmark Shanghai index, which has fallen 27 per cent this year.
However, while loan growth is slowing from 2009, huge amounts of fresh loans continues to pour into the Chinese economy with the total outstanding loans still growing at a rate of 18pc this year. After issuing 10 trillion yuan (1 trillion) of new loans in 2009, Chinese banks are targeted to inject another 7.5 trillion yuan this year, a reduction but still nearly twice the 4.6 trillion yuan of the loans disbursed in 2008. Mr Guo warned that the continuing splurge in lending also raises the risk of a sharp rise in non-performing loans among smaller Chinese banks that have funded local government infrastructure projects, often of dubious viability.
"I think that small banks last year newly issued loans grew even fast, some even doubled their liability and assets," Mr Guo said. "At the moment the banks seem healthy but I think that small banks, because we don't know the structure of their assets, maybe have got more risk exposures because they are growing too fast and their risk management is not as good as big banks. "And secondly because they are very small and their loans are going to a more concentrated number of customers, that also could definitely cause a problem."
Mr Guo added that with such massive stimulus Chinese inflation, currently running at 2.8pc, was at growing risk of rising. Almost all the coastal provinces that make up China's manufacturing heartland had granted wage increases averaging 20pc this year. Analysts add there is an increasing anecdotal evidence to suggest that China's official inflation figures do not reflect the true pace of price rises being felt by people on the ground. The price of some foodstuffs is up 20pc this year. Tom Miller of the Dragonomics consultancy in Beijing said: "The Chinese government recently mooted that food subsidies be handed out to rural low-income families, which is a sure indication of the government's true concerns on inflation.
"The last time the government took that kind of measure was in April 2008 when consumer price inflation hit 8pc for three months running, which suggests the government knows that real inflation is higher than the official numbers suggest." The growing inflationary strain has increased pressure in the country for a rise in interest rates, a tool that China's central bankers have been reluctant to use for fear of damaging exporter competitiveness and piling more burdens on the loan bills of already over-stretched provincial governments.
However, Lu Feng, professor of economics at Beijing University, said that time was running out for China's monetary authorities to act. "Although the Chinese government's efforts to control inflation are impressive, the prospects for fighting this inflation without effectively addressing the problems of loose money are not very encouraging," he wrote this week on Forbes.com. "In order to control inflationary pressures effectively, China needs to use the policy instrument of interest rates as a matter of urgency."
Shanghai new home deals may fall 70%
by Cao Qian - Shanghai Daily
New home transactions in Shanghai may plunge 70 percent in May from a month earlier as several real estate developers are reluctant to slash prices amid uncertainties in the local market. There were just 258,000 square meters of new homes, excluding those designated for relocated residents under urban redevelopment plans, sold in the first 27 days of this month, Shanghai Uwin Real Estate Information Services Co said yesterday.
"For the whole month, the figure should be around 300,000 square meters, and that could be a plunge from a month earlier when 1.02 million square meters of new houses were sold across the city," said Lu Qilin, a researcher at the firm. "On the supply side, more than 850,000 square meters of new housing were launched for sale this month, compared with 1.23 million square meters in April."
In mid-April, the central government unveiled several measures, including higher down payment and mortgage interest rates for buyers of second homes. These measures have sharply cut the number of deals in new and existing markets over the past few weeks. However, home prices in the city still remained rather high.
"Real estate developers are still waiting for detailed local guidelines because they find it hard to decide if they should cut prices or how much discounts to offer until they receive clearer signals from the government," said Sky Xue, an analyst at China Real Estate Information Corp. "The details will indicate whether the local government has a tough or mild stance toward the housing market."
Only a few developers have cut their prices and mainly in the city's outlying areas. For example, discounted prices for a residential project in Gucun, Baoshan District, are as much as 25 percent lower than six months earlier, analysts said. China Vanke Co, the country's largest publicly listed developer, may cut apartment prices by 10 to 30 percent within three months, the Beijing News said yesterday, citing an unidentified sales agent. Local Vanke officials declined to comment yesterday.
China Property Bubble Bursts in Bond Market as Kaisa Drops
by Katrina Nicholas - Bloomberg
Dollar bonds sold by China real estate companies this year are the worst performers among Asian non-financial corporate debt denominated in the U.S. currency amid concern the nation’s property market is overheating. Yields on the $3.9 billion of bonds issued by Kaisa Group Holdings Ltd., Country Garden Holdings Co. and seven other developers since January widened by an average 2.26 percentage points relative to Treasuries as of last week, according to data compiled by Bloomberg. That’s more than the 2.05 percentage- point increase in spreads for the seven dollar-denominated bonds sold by other companies in Asia outside Japan.
Investors are demanding greater yields to lend to China property firms, a sign they expect borrowers will have a harder time meeting debt payments amid a government clampdown down on lending. Goldman Sachs Group Inc. and Credit Suisse Group AG cut their profit estimates for Chinese real estate companies after a 12.8 percent jump in real estate prices in April from a year earlier spurred the state to increase regulation.
“New issues by Chinese developers will stall for the time being,” Vince Chan, the Hong Kong-based chief credit strategist with Amias Berman & Co. LLP, a fixed-income advisory and brokerage firm founded by two former Citigroup Inc. bankers, said in a phone interview. “Investors need handsome rewards for getting exposed to weaker fundamentals.”
Widening Spreads
The amount of dollar bonds issued by China developers represents 45 percent of all corporate dollar debt sales in Asia outside Japan this year, Bloomberg data show. The yield spread on $350 million of 13.5 percent notes sold by Shenzhen-based Kaisa last month widened the most of the nine issues, expanding to 16.52 percentage points from 11.07 percentage points, Nomura Holdings Inc. prices on Bloomberg show. Kaisa is developing 18 projects in Shenzhen, Dongguan and other cities in the Pearl River Delta, most of them high-rise residential complexes that combine recreational and commercial space, according to its website. An investor who bought the company’s 2015 bonds at par would have lost 15.5 percent.
Elsewhere in credit markets, the extra yield investors demand to own company debt instead of Treasuries rose 5 basis points last week to 193 basis points, or 1.93 percentage points, Bank of America Merrill Lynch index data show. The spread, which peaked at 511 on March 30, 2009, widened from this year’s low of 142 on April 21. Average yields rose to 4.06 percent, the highest based on weekly closes since the period ended March 5.
Sales Slow
Corporate bond issuance worldwide slowed this month to $66.1 billion, down from $183 billion in April and the least since December 2000, according to data compiled by Bloomberg. “Companies have to be prepared to strike and strike quickly,” Rick Martin, the London-based director of treasury at Virgin Media Inc., the U.K.’s second-largest pay-television company, said at a May 28 briefing in London. “The key is to have the team ready and primed and able to pull the trigger at short notice. I can’t think of a time when the forces have been so polarizing.”
The cost to insure U.S. corporate debt against default rose. Credit-default swaps on the Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses or to speculate on creditworthiness, increased 25.1 basis points this month to a mid-price of 117.2 basis points. The index typically rises as investor confidence deteriorates and falls as it improves.
Bond risk rose in Asia today, with the Markit iTraxx Asia index increasing by 2 basis points to 135 as of 3:40 p.m. in Singapore, according to Royal Bank of Scotland Group Plc. The index has surged 32.4 basis points this month, heading for its biggest monthly jump since February 2009, prices from CMA DataVision in New York show. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
In emerging markets, spreads narrowed 16 basis points last week to 321 basis points, trimming the monthly increase to 63, according to the JPMorgan Emerging Market Bond Index. The world will increasingly depend on emerging markets to maintain growth and stability, Federal Reserve Chairman Ben S. Bernanke said in prepared remarks to a Bank of Korea conference in Seoul today. Federal Reserve Bank of Chicago President Charles Evans told reporters in Seoul that he “wouldn’t be surprised” if the Fed’s policy of keeping rates low “gets extended just a little bit” by Europe’s sovereign debt crisis.
Interbank Rates
The rate banks say they pay for three-month dollar loans fell in Asia for the first time in 13 days as concern about Europe eased, helping arrest a flight to dollars by global funds. The Singapore three-month interbank rate for U.S. dollars, or Sibor, slid to 0.541 percent, according to the 11:30 a.m. fixing by the Association of Banks in Singapore. The rate reached 0.547 percent on May 27, the highest since July 8, 2009.
China has added to regulations designed to cool the property market several times this year, including raising banks’ reserve requirements three times since January, restricting pre-sales by developers and curbing loans for third- home purchases. It also raised minimum mortgage rates and tightened down-payment requirements for second homes. Shanghai’s plan to begin a tax on residential real estate was submitted to the central government for review, the China Securities Journal reported today, citing unidentified people.
Goldman Sachs lowered its 2010 net income estimates for Chinese developers by an average 13 percent and reduced earnings forecasts for the next two years by 25 percent, analysts led by Yi Wang wrote in a May 19 report. Credit Suisse pared earnings- per-share estimates by as much as 15 percent for 2010 and 20 percent for 2011, citing the government’s clampdown. “With the negative headlines coming out of this sector, investors are less likely to be drawn to participate in new issues because of a high coupon,” Tan Chew May, a credit analyst for Aberdeen Asset Management Asia Ltd., which oversees $1.5 billion of Asian dollar debt, said in a phone interview from Singapore.
“With the trend of widening spreads, new names are forced to come at premium.” China property developers paid coupons as high as 14 percent to issue dollar debt this year, compared with an average 9.2 percent for other companies in Asia and 6.2 percent for U.S. property companies. On average, Chinese property companies are paying a 10.875 percent coupon.
Poor Conditions
Glorious Property Holdings Ltd., which has 26 real estate projects in cities including Shanghai, Beijing, Harbin and Changchun, postponed its first sale of dollar-denominated bonds in April. The Hong Kong-listed company cited poor credit market conditions for the delay. Renhe Commercial Holdings Co., a developer of underground shopping centers based in Harbin, China, sold five-year, 11.75 percent dollar notes on May 18 to yield 974 basis points more than Treasuries after delaying the sale for two weeks.
The relatively strong finances of China developers means some companies can afford to pay double-digit coupons, according to Andy Mantel, Hong Kong-based founder of hedge fund manager Pacific Sun Investment Management Ltd. Country Garden, which builds villas, townhouses and apartments in China, sold bonds in April with an 11.25 percent coupon. The company, controlled by China’s second-richest woman, Yang Huiyan, said contracted revenue in the first quarter rose 82 percent on sales in the Guangdong area.
“The sector is relatively better financed than it was two years ago when there were serious liquidity issues,” Mantel said in a phone interview. “Investors might not make any money on the actual bond, but they’ll get their interest payments.” Fantasia Holdings Group Co.’s $120 million of five-year bonds pay the highest coupon at 14 percent. The company develops commercial and residential complexes in China’s Pearl River Delta and Chengdu-Chongqing Economic Zone regions. It raised HK$3.18 billion ($408 million) from an initial share sale in Hong Kong in November, boosting cash reserves to $497 million from a deficit, Bloomberg data show.
“Sales and pre-sales have increased cash balances for most companies by over 20 to 30 percent while fresh debt issuance has extended maturity profiles,” analysts led by Raghav Bhandari at CreditSights Asia Research Ltd. wrote in a note to clients May 20. “Companies are in a much better position to handle this period of strain than they were a year ago.”
High-Yield
“People are attracted by the high coupons of the sector, but are fearful of the regulatory announcements and how it might affect the credits,” Sean Henderson, head of Asia debt syndication at HSBC Holdings Plc, said in a phone interview from Hong Kong. “More recently, the overall market backdrop has taken the whole high-yield sector lower.” The yield spread on speculative-grade company dollar bonds in Asia widened 174 basis points this month as of May 28, compared with 50 basis points for investment-grade companies, JPMorgan indexes show. High-yield debt is rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.
Credit-default swaps insuring against Country Garden defaulting on its debt rose 343 basis points to 10.39 percentage point this month through May 18. The contracts suggest investors are pricing in a 50 percent chance of default. Similar contracts insuring Agile’s debt have soared 3.85 percentage points since mid-April, when China’s central bank pledged to implement new lending rules to cool real estate “madness.” At current rates investors are pricing in a 48 percent chance of default.
Chinese property bonds are unlikely “to recover meaningfully anytime soon,” Amias Berman’s Chan said. “If we start to see the regulatory measures taking effect in the next few months then there may be a reversal of fortunes. But optimistically I think it’ll be the third or fourth quarter before things stabilize.
China warns debt woes threaten global recovery
by Chris Buckley and Yoko Nishikawa - Reuters
China warned on Monday that Europe's struggle to contain ballooning debt posed a risk to global economic growth, raising the specter of a double-dip recession. Premier Wen Jiabao, addressing business leaders during an official visit to Japan, issued his warnings a day after France admitted it will struggle to keep its top credit rating and days after a downgrade of Spain's credit status again jolted financial markets. Referring to the risk of a second dip in global economic growth rates, Wen said: "I believe that we can't say with absolute certainty, so we must undertake close observation and act to prevent it.
"The world economy is stable and beginning to revive, but this revival is slow and there are many uncertainties and destabilizing factors," he said, adding it was too early to wind down stimulus deployed during the 2007-2009 financial crisis. Governments around the world ran up record debts during the $5 trillion effort to pull the economy out of its deepest slump since the Great Depression and now face a tough balancing act: how to reduce debt without choking off growth. "Some countries have experienced sovereign debt crises, for example Greece. Is this kind of phenomenon over? Now it seems that it's not so simple," Wen said. "The sovereign debt crisis in some European countries may drag down Europe's economic recovery."
ECB Governing Council member Ewald Nowotny summed up the task. "The big challenge is to prevent a vicious circle in which (a) crisis of the public sector again leads to crisis developments in the financial and real sectors of the economy," he told a conference hosted by Austria's central bank. Greece stumbled into the global spotlight late last year when it sharply revised its budget deficit figures, provoking a series of credit downgrades and sending its borrowing costs soaring, which in turn fanned fears it may default on its obligations.
While a 110 billion euro rescue package put together by the European Union and the International Monetary Fund helped avert an immediate meltdown, it failed to dispel fears that other highly indebted euro zone members such as Spain, Portugal and Italy may face a similar fate. A massive 750 billion euro emergency scheme cobbled together by EU leaders early this month, again with IMF help, aimed to deter with its sheer size possible speculative attacks on the euro zone's weaker members and thus support the euro.
In return for the safety net, Athens, Lisbon, Madrid and Rome signed billions of euros in spending cuts and tax hikes to rein in debt, despite an outcry from trade unions and political backlash. IMF Managing Director Dominique Strauss-Kahn praised Spain's austerity package in a newspaper interview, saying they should help restore confidence. On Friday, Fitch became the second ratings agency to strip Spain of its top triple-A rating a day after it passed its austerity plan by a single vote.
However, recent opinion polls showing the ruling Socialists trailing badly behind the center-right opposition cast doubt whether the government will manage to muster enough support in parliament for its budget. Such concerns, have been plaguing the euro, which is heading for its worst month since January 2009, down more than 7 percent against the dollar since the start of May and heading for the sixth straight monthly fall. It was steady in Asia on Monday. "It is difficult to see a recovery in market sentiment as there are worries that further bad news about southern European countries may come out," said a currency trader at a Japanese bank.
Investors and policymakers around the world are also increasingly worried that Europe's efforts to cut debt will sap the continent's anemic growth, denting demand for exports from emerging economies and derailing the global recovery. The fact that not just the fiscally weakest southern European countries, but also nations at the euro zone's core are under pressure to cut debt and deficits amassed during the financial crisis, is adding to those concerns.
On Sunday, France said keeping its AAA credit rating would be a stretch without some tough action on its deficit, while Germany indicated it might resort to raising taxes to bring its shortfall closer to the EU's limit of 3 percent of gross domestic product. France, the euro zone's second-largest economy, expects the budget deficit to hit 8 percent of GDP this year, but aims to bring it down to the EU limit by 2013.
Germany, Europe's biggest economy, expects its deficit to exceed 5 percent of GDP in 2010. In the future, major improvements are needed in the euro area to prevent bad fiscal behavior and to enforce effective sanctions in the case of breaches of fiscal rules, the head of the European Central Bank, Jean-Claude Trichet told the conference in Austria. Striking a more optimistic note, China's Wen said the world's third-largest economy and its prime growth engine remained on course to meet its growth targets this year, though he added it would require Beijing to "maintain a certain level of intensity in its economic stimulus."
Number of the Week: Misrated Mortgages
by Mark Whitehouse - Wall
16%
16%: The share of triple-A rated subprime-mortgage bonds issued in mid-2007 that should never have received that rating, given the information available at the time.
As Congress prepares to rework the business of providing credit ratings, the firms that put their triple-A imprimatur on hundreds of billions of dollars in disastrous investments are raising a familiar refrain: We did the best job we could, given the information we had at the time. A new paper analyzing the ratings firms’ performance at the peak of the credit boom, though, adds to the evidence that their defense is shaky. It also offers a glimpse of the scale of their contribution to the financial crisis.
The paper focuses on investments backed by subprime mortgage loans. Typically, bankers create these investments by stuffing thousands of mortgages into a little company that issues about a dozen separate bonds. Ratings firms decide what portion of those bonds deserve the coveted triple-A rating.To test how well the ratings firms performed, the paper’s authors — Adam Ashcraft and James Vickery of the Federal Reserve Bank of New York, and Paul Goldsmith-Pinkham of Harvard University — tried to figure out how a reasonable person, armed with the most basic information, would have rated the same bonds in the period leading up to the financial crisis. To do so, and to avoid accusations of hindsight, they put together the simplest and most backward-looking ratings model they could. It considered variables such as house prices, credit scores, income, debt levels and the amount of documentation borrowers provided — all factors that the ratings agencies claimed to consider.
As of the second quarter of 2005, the model and the ratings agencies appeared to be in agreement: A bit more than 80% of the bonds in the average deal during the quarter deserved the triple-A rating. But as the quality of subprime lending deteriorated over the next two years – more loans with no documentation, no down payments, and borrowers with lower credit scores – the ratings firms actually gave out more triple-A ratings. In the second quarter of 2007, the average subprime deal contained 84% triple-A bonds, at a time when the model suggested the number should have been only 71%.
In other words, the ratings firms put their gold-standard seal of approval on 16% more bonds than even the simplest model would allow, given the information available at the time. And that doesn’t include the hundreds of billions of dollars of even-more-complex securities, known as collateralized debt obligations, that gained triple-A ratings even though they contained or were linked to 100% triple-B subprime bonds.
The most charitable explanation for the ratings firms’ behavior is that they try to take a long-term view, discounting current trends in, say, house prices — but the paper’s authors note that this alone cannot account for the whole discrepancy. Other possible explanations: Either the ratings agencies were very slow to react to deteriorating mortgage performance, or they inflated their ratings to win business from bankers at a time when rating subprime-backed investments made up a huge portion of their profits.
Whatever the explanation, erroneous triple-A ratings have consequences far beyond duped investors. They allowed banks to buy tons of the bonds without setting aside much capital against losses – a practice that ended in losses greater than the banks could bear. They also made it much easier to keep making cheap loans to homeowners with sketchy credit, helping inflate and perpetuate the housing bubble. Greater regulation of the credit-rating firms, together with greater legal responsibility for their ratings, might have some unintended consequences. But given the evidence, it’s hard to say they didn’t bring it upon themselves.
Slouching Toward Despotism: Are We There Yet?
by Keith Hazelton- Anecdotal Economist
Benjamin Franklin, when asked at the conclusion of the Constitutional Convention in 1787 what that assembly had created, purportedly responded, “A republic, if you can keep it,” which seems likely given his remarks to Convention members on that September day immediately prior to their vote on the proposed Constitution in its original form.
Often, but on far more occasions in the last three years, we are reminded of a portion of those remarks. Dr. Franklin, given his age (81) and health, asked to have his commentary read to delegates preceding what he hoped would be a unanimous vote in favor of a nonetheless flawed agreement.And the question we keep pondering is, “Are we there yet?” Are we merely slouching toward despotism, or have we arrived? Are we already so corrupt so as to need despotic government, what with Vampire Squids and corporate/union-bought elections and Congressional bystanders and regulatory capture and Systemically Important Too Big To Fail and Gulf of Mexico oil well disasters?“In these sentiments, Sir, I agree to this Constitution with all its faults, if they are such; because I think a general Government necessary for us, and there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, (but) can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other.” (Emphasis ours.)
(Despotism, by the way, describes a form of government by which a single entity rules with absolute and unlimited power, and may be expressed by an indvidual as an autocracy or through a group as an oligarchy according to Wikipedia, the world's leading source of made-up information, which is good enough for us.)
In previous posts we have observed the growing and discernable disconnect between several types of government-reported economic data such as Retail Sales and actual state sales tax collections, and the Employment Situation and withholding tax collections. Others also have made solid cases for these disconnects between statistical theory and economic reality and it occurs to me that, far from being isolated or random events, they are evidence of much more disconcerting forces at work.
Fudging on unemployment numbers or "rounding up" retail sales reports may seem like minor infractions, and many of these government data reports have been manipulated for years, maybe half a century, but they represent a pattern of conscious, calculated design of "don't worry, be happy, the government's in charge, nothing to see here, so move along."
The Bureau of Labor Statistics (BLS), for example, estimates who is working and who is not, but conveniently excludes millions of people from its composition of the unemployment rate who are not working but neither deeming them “unemployed” because they are “marginally attached” to the workforce or are “discouraged” by a lack of job prospects and no longer are looking for employment (2.3 million as of March 2010 plus another 3.4 million “persons who currently want a job,” who also aren’t counted as unemployed).
(Side note: You are well aware, of course, the Social Security Administration probably could tell us monthly almost exactly how many people really are working, not working, working part time, self-employed, and so on based on its receipts of tax withholdings from employers. It is beyond the pale to imagine SSA could not furnish a version of the monthly Employment Situation that would be far more reliable by orders of magnitude than the guesses of the BLS.)
As to why government statistical agencies may be reporting "happy" numbers, well, you know the answer to that...government statistics are lying's fifth circle of hell, just a shade better than Campaign Promises.
How about the major changes to the Producer Price Index and the Consumer Price Index which were made in the 1980s and 1990s to greatly reduce reported inflation numbers as a means of containing the cost of living adjustments (COLAs) for Social Security recipients, as John Williams at http://www.shadowstats.com/ extensively has reported for years?
Or the March 2010 Monthly Treasury Statement, which understated the true government deficit last month by including a $117 billion collection described as “proprietary receipts from the public” by the Treasury, likely TARP repayments but not defined as such. Or the December 2009 Monthly Treasury Statement in which $45 billion extracted from the nation’s banks as a 13-quarter advance FDIC premium also was shown as a “negative outlay” which creates a significant understatement of the true FY2010 deficit picture (so far, $162 billion this fiscal year, which will understate our true deficit by about 10 percent).
Or the “New” General Motors wasting millions of (tax) dollars for print and television ads to promote a fictitious narrative that it has “repaid” government loans of $8.1 billion (to the U.S and Canada) “plus interest” five years early when in fact SIGTARP, the Special Inspector General of the Troubled Asset Relief Plan Neil Barovsky, told Congress and Fox News that GM did no such thing, that the loan “repayment” did not come the old fashioned way from sales and earnings but from a "cash advance" on another TARP facility which both governments will count as additions to their already significant equity positions. Nothing in those ads mentions the many tens of billions of taxpayer dollars borrowed from China which flowed into General Motors and Chrysler pre-bankruptcy which never will be repaid.
And now the New GM wants to create another automobile financing company, or buy back its former GMAC/Ally unit which itself has received nearly $20 billion of government Too Big To Fail largesse, so it may become even more profitable by returning to sub-prime auto and everything-else lending and have a happy IPO later this year, because as everyone knows, including the New GM's management, there's precious little profit in building cars no one wants and few can afford. "As a dog returns to its vomit, so a fool repeats his folly," (Proverbs 26:11) as Jesse's Cafe Americain recently observed.
How about the seeming inability to legislate any significant financial reform in the wake of the worst economic crisis in 80 years, a crisis which, mind you, needed fewer than eight years to erupt once the last shred of restraint – Glass-Steagall – was forcibly removed at the end of 1999 by those who, coincidentally (paging Messrs. Rubin and Summers), have profited so handsomely from its demise.
(The Banking Act of 1933 – Glass-Steagall – was a wonder of simplicity in a simpler era. It set forth in a mere 37 pages of text the safeguards necessary to separate commercial banking from everything else and to ably prevent for 66 years – two full generations – any meaningful implosion of the nation’s financial system. Any search for cause and effect of The Great Recession must begin here. The useless financial reform act – the Dodd act – weighs in at a lobbyist-induced 1,500+ pages, and will do nothing to prevent another financial crisis, nothing to dismantle Too Big Too Fail, nothing to contain derivatives, nothing to audit the Federal Reserve and nothing to curtail abuses in consumer financial practices.)
Yet where are the criminal investigations? Where is the FBI? Where are the Congressional inquiries and panels and special prosecutors? Where are the indictments? Where are the perp walks and the jail sentences? Where is the justice, Mr. Holder and your 50 friends among the states? Aside from two former Bears Stearns hedge fund managers in 2007, and a pretend hedge fund manager - Mr. Madoff - in 2009, a weak SEC civil show-case against Goldman Sachs in 2010 and the mostly voluntary, golden-parachute-enabled "retirements" of a handful of TBTF C-level executives, a number of which, John-Thain-like, merely have revolved around the door a couple of times and landed at another lucrative looting opportunity, nothing has happened. Nothing, nada, zero, zip, dick. Nothing. It's breathtaking in its design and execution.
We now are reliably told the TARP program will cost less than $100 billion when all is said and done. Huh? What about the $2 trillion-plus of added government debt which itself adds tens of billions to the annual interest servicing burden, or the $1.5 trillion-plus willed into existence by the Federal Reserve? Who are they kidding?
Or a Health Care Act which, in 2,500 pages manages to spend about another trillion dollars or so and leaves no health insurance company behind, effectively criminalizing, albeit with monetary penalties far less than the cost of individually paid health insurance plans, anyone not otherwise exempted who fails to purchase health care coverage.
It seems to us, after thinking about this topic for some time now, that we have arrived. We have arrived at that point in our civilization in which our government deems it acceptable to obfuscate about things both small and large on the basis that, Jack-Nicholson/Colonel-Jessup-like, we (the rest of us who aren’t lodged in the political/oligarchical castes) “can’t handle the truth.”
And most of the time it would appear they are right, that we – the rest of us – can’t be bothered with such discrepancies and inconsistencies, falsehoods and half-truths. We're too busy trying to keep the house, make the mortgage and auto loan and credit card and student loan payments. We're too focused on our own financial survival to be concerned with what goes on at a national leadership and direction level. And doesn't it just seem a little too convenient for those who wish to plunder the wealth of the nation to keep the other 90 percent of us so strapped with indebtedness and an outdated personal moral conviction that debts should be repaid regardless of their potential to physically and mentally harm one's well being or, heaven forbid, harm one's all-important credit score, when walking away from debt has been an accepted business practice for centuries?
It only seems to matter on those rare occasions when things blow up, and the average, non-voting, non-taxpaying citizen awakens from his or her media-induced stupor to ponder that when the curtain is drawn away, it reveals only humans and not wizards, or that the outgoing tide reveals who has been swimming naked or when the emperor is shown to be undressed. But interest in such matters wanes quickly, and the thirst for change recedes silently into renewed acceptance of the status quo, as we now discover.
Soon, no doubt, when markets resume their upward trajectory and the Dow returns to and surpasses 14,250 (probably by this summer) and oh-don't-worry-about-those-6.5-million-log-term-unemployed-because-they're-just-lazy, much of this unpleasantness of the last three years will be forgotten by those more interested in only good news and Dancing With the Stars and American Idol, and the continued warnings of the Cassandras will be deemed evidence that these are, once again, merely the musings of disaffected social misfits or bad-news-opportunists who deep down must hate America (right up until the point at which the next crisis erupts, and erupt it will).
In fact, our short attention spans are relied upon by the political class of both parties and by the oligarchical class which controls it, as magnificent wealth transfer schemes blossom anew (talk about green shoots...) and the all-so-brief period which has elapsed between the “days away from financial Armageddon” of September 2008 and the "all clear, business as usual" of May 2010 insures, like the watered-down, useless "financial reform" legislation written by financial industry lobbyists which certainly will pass soon, that the laudable goal of making safe our financial system and returning it to the status of handmaiden to legitimate capital-producing and jobs-creating enterprise, will be discarded in exchange for the pretense of life as we knew it, circa 2006.
Only this time, effectively having destroyed the middle class of Boomers, Gen X-ers, Gen Y-ers, Millennials and Echo Boomers, and having bought the complicit silence of the of a near-majority (47% of Americans paid no income tax whatsoever in 2008) in exchange for bread and circuses, and having largely destroyed the previous primary mechanism by which wealth has been stolen and transferred (credit creation and personal indebtedness), the masters of the universe will have to find a new scam, which, at this writing, appears to be sovereign government debt, currencies and commodities, because turning back the calendar to 2006 alone will never recreate the consumer spending/debt orgy of 1982-2006.
In fact we think the oligarchs realize this, and they are redoubling their efforts to pillage as much as possible before the real collapse occurs, even as its seeds already have been sown in this crisis which now appears, by design and deception, to be ending. That collapse draws nigh, and Roubini and Taleb and Ritholtz and Panzer and Jesse and Tyler and Mish and Yves and Charles Hugh Smith and Joe Bageant and many, many others already see it, yet all are being dismissed - again - as those nattering nabobs of negativism who, broken-clock-being-right-twice-a-day-like, were merely “lucky” in guessing about the immediate past crisis as former Fed Chairman Alan Greenspan suggested in a recent television interview.
Tell us Greece is not the "sub-prime" of early 2007; that the US$150 billion "cure" to be soon applied by the EU and IMF is only can-kicking but will allow one and all to congratulate themselves on "containing" an isolated problem and to quickly return to the never-ending cocktail party, that is until the next Greece Fire which spreads to one after another country, including, ultimately, the possibility of the conflagration reaching bond markets in the U.S.
Or that a mere US$1 trillion of bailout/rescue/currency support recently proposed by the Eurozone and the IMF to "shock and awe" financial markets dominated by the recently rescued TBTFs who busily apace bet against the very governments which saved them (except now in Germany), is not merely another stealth rescue of these giant financial institutions which, having been caught with a bit too much Club Med sovereign debt on their books while their own prop traders work hard to destroy its value, now cry out - again - that the risk of their insolvency - again - threatens the global financial and economic systems.
Or that the battling machines of high-frequency trading, which briefly wiped out and then restored a trillion dollars worth of fictitious (paper) wealth in fewer than 15 minutes mid-afternoon May 6th in a dry-run rehearsal of things to come, won't now become even more emboldened and empowered to manipulate financial markets in any manner necessary to insure continued quarters of perfectly profitable trading days.
(May 6th should have been a non-event. We were expressly warned by the Manhattan Assistant US Attorney in a July 2009 court filing, in which it was alleged that a former Goldman Sachs quant trading programmer stole Goldman's "secret proprietary trading code," that "there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways." Well, duh. Doesn't it just seem like someone took this code, or a similar one, out for a test drive earlier this month?)
Soon, perhaps if not already, the wealth transfer will be complete, and a newly impoverished, former middle class will wake up from their recliners to find not only is Dancing With the Stars over, but also is their former debt-fueled way of life as the economy staggers, unemployment escalates, more good jobs are exported and living standards rapidly erode. (Irony alert: Their former U.S. employers, who effectively have downsized and off-shored their way to record profits, will find they have destroyed their own customer base - the former middle class - who no longer can afford their products.)
When 40 million people are receiving food stamps at one end of the economic spectrum (and probably another 20 million eligible according to the Department of Agriculture), and the bulk of financial and real assets have been concentrated into the top 10 percent of the other end of the economic spectrum, nothing good can come of it. So the well-off cohort will remain well-off and will conspire to direct through their agents in government only enough resources to buy the complicity and silence of the bottom 40 percent, like tax breaks, food stamps, health care subsidies and so on, and the soon-to-be-former middle class will be ground into yet lower levels of the economic ladder, such, that when the looting has concluded, we will see a top 10 percent and a bottom 90 percent, much as feudalistic Europe in the centuries of the Dark Ages.
(We strongly recommend two books on the subject, both of which in far more detail and eloquence lay out the symtoms, causes and effects of our slouch toward despotism: Survival +, by Charles Hugh Smith at Of Two Minds, and Deer Hunting With Jesus: Dispatches From America's Class War, by Joe Bageant at Joe Bageant (and whose recent post about the American Hologram Lost on the Fearless Plain also is required reading).
“All lies and jest…Still a man hears what he wants to hear and disregards the rest,” so said Paul Simon, which rings so true more than four decades later. We hear what we want to hear, and, apparently, what we want to hear is that all is back to normal, that all is good, that the wizards have everything under control, and that nothing bad can ever happen again.
So, are we there yet? Have we not already abdicated our responsibilities as citizens and tacitly embraced the despotism of which Franklin predicted 222 years ago, having become so corrupted (contaminated) as to require the despotic government of an oligarchy dedicated to insuring the truth never gets in the way of a good narrative, an enormous disparate accumulation of wealth and a firm grip on the levers of power to ensure the preservation of that wealth?
A few Tea Party primary victories and incumbent "mandatory retirements" aside, nothing will change in Washington as long as the strings of campaign cash and lobbyist perks are being pulled elsewhere. The "outs" who soon will replace some of the "ins" promptly will forget about their mandates from the voters the day they move into their new D.C. offices and townhomes and realize from moment one their only responsibility is to their own rational self-interest of being re-elected in 2012 and 2014 and 2016. Et tu, Barack?
And if Benjamin Franklin is not prescient enough for you, how about the Teacher, in Ecclesiastes, Chapter 1, v.13-18, from about 2,300 years ago:What a heavy burden God has laid on men! I have seen all the things that are done under the sun; all of them are meaningless, a chasing after the wind. What is twisted cannot be straightened; what is lacking cannot be counted. I thought to myself, "Look, I have grown and increased in wisdom more than anyone who has ruled over Jerusalem before me; I have experienced much of wisdom and knowledge." Then I applied myself to the understanding of wisdom, and also of madness and folly, but I learned that this, too, is a chasing after the wind. For with much wisdom comes much sorrow; the more knowledge, the more grief. (Emphasis added.)Indeed, with wisdom comes sorrow, and from more knowledge, more grief. Would, sometimes, that we could empty so much of it from the mush of our remaining gray matter and then we wouldn't have to pretend it's all good, when, in fact, it’s anything but good, as soon, perhaps in a matter of a few short years, we shall see.
We first wrote the following paragraphs in June 2006, long before sub-prime lending, a bursted housing bubble, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch, CitiGroup, Bank of America, JPMorgan Chase, Goldman Sachs, GM, Chrysler, the Federal Reserve, the Treasury Department and The Great Recession began to dominate our lives, when Franklin’s predictions and our inexorable slouch toward despotism first appeared on our radar screen:The transition from unitary executive to dictator – conservative, benevolent or otherwise – will not happen in the waning months of the current administration, so uniquely manifested by America's First Triumvirate of George Bush, Dick Cheney and, until recently, Karl Rove, but succeeding chief executives may choose overtly to expand further the envelope-pushing and Constitution-trampling of the 43rd President and his neo-conservative command-and-control cabal as the American oligarchy, and the nation, slouches slowly toward despotism.Are we there yet?
As such, we will one day awake from our debt-financed, pleasure-induced stupors to find one person or group firmly in charge, answering to no one, especially not Congress, and in complete grasp of the military, the intelligence agencies, the treasury, the Federal Reserve and the financial and judicial systems. It will happen – it is happening – an inch at a time, until the day comes when not only will we, the fun-loving, celebrity-worshipping, civic-duty-abhoring citizens of America, so embrace the notion of despotism, we will think it entirely our own idea.
BP facing multimillion-dollar legal claim from British pension fund
by Terry Macalister - The Observer
The Gulf of Mexico oil spill, which could see BP face hundreds of lawsuits, is giving new impetus to a highly damaging legal case stemming from a previous environmental disaster in Alaska. A UK pension fund alleges that it lost money because of falls in the BP share price after a pipeline leak in the Prudhoe Bay field four years ago. Lawyers for the fund say the latest spill is providing further ammunition for its case.
"It is too soon to tell exactly what went wrong in the gulf, but what is clear is that they [the accidents] both reflect a corporate culture and series of operating procedures that need to be reformed," said Thomas Dubbs, a partner at New York law firm Labaton Sucharow, which is handling the case against BP for the Lothian pension fund, claiming tens of millions of dollars. The fund, an investor in BP, looks after the retirement benefits of 67,000 workers employed by councils in Edinburgh and the Midlothian area, and also by the local bus company.
The pension providers are taking the company to court for the stock market losses attached to pipeline fractures that resulted in 200,000 gallons of oil being spilled and the Prudhoe Bay field being temporarily shut down. Accidents in March and August 2006 knocked billions off the BP share price, and Lothian is arguing that its funds have paid the price for management ineptitude. The Lothian case could open the way for similar challenges and do further damage to BP's reputation, which was also hurt by the Texas City refinery fire in the US in 2005, when 15 workers died. The company is being battered anew by the Gulf of Mexico disaster, which has wiped $30bn off the share price.
Investigations by Congress and US federal authorities into the Alaskan spills showed, say the plaintiffs, "that BP knowingly, or with deliberate recklessness, failed to properly maintain, operate, inspect and monitor its pipelines at Prudhoe Bay". They go on: "BP had received repeated warnings from multiple sources and knew that its pipelines were severely corroded, repeatedly cut corrosion-inhibiting maintenance in order to reduce costs and improve profits, and failed for more than 14 years to inspect the inside of the pipelines with an in-line inspection tool that would have precisely identified the level and location of the corrosion."
The Prudhoe Bay case comes as the oil company and the rig operator in the Gulf of Mexico, Transocean, are reported to be facing 130 lawsuits filed by fishermen, property owners and tourism businesses claiming damages from the oil coming ashore after the explosion.
The Lothian action, brought against BP's former group chief executive Lord Browne and BP America boss Robert Malone, claims that the company knew of the corrosion problems at the highest level. The Lothian lawyers say that, as far back as May 2004, the chairman of the environmental committee of BP's board of directors, Walter Massey, received a letter predicting a "major catastrophic event" and warning that cost-cutting had caused "serious corrosion of flow lines and systems". BP declined to comment on the case.
BP’s costs could spiral to $3 billion if oil leak is not plugged
by Rowena Mason
BP has acknowledged that it is unlikely to stop its leaking oil well until new drilling is completed in August, meaning its near-$1bn of costs could triple during another two months of clean-up efforts. The energy major has already spent more than $930m (£642m) so far, causing the company’s shares to drop 25pc since the leak started a month ago. Another eight weeks of attempts to stem the flow, stop the spill from spreading and pay additional compensation claims could make the bill escalate to $3bn if the oil company’s spending rises at the current rate.
Mary Landrieu, a Louisiana Democrat senator, on Sunday called on BP to pledge $1bn immediately to protecting marshes, wetlands and estuaries across the region. “While we may not be able to plug the leaking well right away, there is nothing that should stop us from getting help to the Gulf Coast immediately,” she said. Robert Dudley, a BP managing director, admitted the only “end point” was likely to be two relief wells, which will have taken three months to complete. The company will pour cement down the new holes to cut off the flow of oil.
This weekend, BP had to abandon its latest attempt to stop the well from gushing more than 5,000 barrels of oil into the Gulf of Mexico. It is the third method that BP has deployed without success since the Deepwater Horizon rig, operated by contractor Transocean, exploded and sank, killing 11 men. The “top kill” technique, which involved pumping heavy fluids into the well, was halted after US officials expressed “very grave concerns” about its safety.
US officials have now seized control of the spill clear-up operation, dictating what BP should do to mitigate the disaster. The company is now attempting to put a bigger cap over the leak, after an earlier attempt to place a “top hat” over the opening ended in failure. There is “no certainty” that this will work, according to BP. Ed Markey, a Democrat member of Congress who has been strongly critical of BP, last night claimed it was guilty of an “environmental crime against our country”.
The spill – now the size of Luxembourg – could multiply if a hurricane hits the Gulf of Mexico this summer. US weather experts predicted that up to seven could hit the region this season in one of the worst patches on record. However, the Deepwater Horizon response team, including BP and the US coastguard, said a hurricane could either send the oil further out to sea or push it towards the mainland.
Top kill's failure means Gulf oil spill will only get worse
by Renee Schoof and Chris Adams - McClatchy Newspapers
If the growing oil disaster in the Gulf of Mexico isn't contained soon — and the latest efforts suggest that's unlikely — then the damage to the fragile region will intensify over the coming summer months as changing currents and the potential for hurricanes complicate the containment and cleanup efforts. "It's all lose, lose, lose here," said Rick Steiner, a retired University of Alaska marine scientist who's familiar with both the current Gulf oil spill and the Exxon Valdez disaster two decades ago. "The failure of the top kill really magnified this disaster exponentially," he said. "I think there's a realistic probability that this enormous amount of oil will keep coming out for a couple months. This disaster just got enormously worse."
As the federal government and BP try yet another strategy to curb the flow of oil from the blown well a mile below the surface of the Gulf — one that could increase the flow of oil by as much as 20 percent — scientists anticipate a range of disastrous effects, only some of which are well understood. The damage to the shorelines of Gulf states such as Louisiana, Mississippi, Alabama and Florida is literally only the surface of the problem: The damage to the sea floor could be extensive, and oil could also devastate marine life between the Gulf floor and its surface, as well as in coastal areas far from the leaking wellhead.
If none of the short-term solutions plugs the well, the only long-term fix _ drilling two relief wells to stem the flow of oil _ likely won't be completed until late July or August. President Barack Obama on Saturday called the news about the latest failed attempt "as enraging as it is heartbreaking." "As I said yesterday, every day that this leak continues is an assault on the people of the Gulf Coast region, their livelihoods, and the natural bounty that belongs to all of us," he said in a White House statement.
Larry Crowder, a professor of marine biology at Duke University, said that if the spill continues for a couple more months, then oil almost certainly would get into the Loop Current that flows clockwise around the Gulf. It then would be a week to 10 days before it got to the Florida Keys, and a couple of weeks more before the Gulf Stream carried it to North Carolina. If the leak had been stopped this weekend, the oil might have been diluted, but if there's two to three times the current amount by August, he said: "It could go anywhere." "If you have enough oil, it can go a big distance," and some 100 million gallons could be spilled by this summer. "There's almost no place that's off-limits," Crowder said.
With summer approaching, hurricanes are the most obvious complication. The National Oceanic and Atmospheric Administration predicts an above-average hurricane season, and a hurricane getting into the Gulf and moving toward the Louisiana coast could force BP to halt its effort to drill the relief wells until the storm passed. Hurricanes also could disperse the oil farther and wider _ or roil the waters so that oil at the surface plunges to great depths and poisons the deepwater ecosystem. A hurricane and its accompanying storm surge also could drive oil onto land, even into the rice and sugarcane fields that aren't far from the coast in Louisiana, said James H. Cowan Jr., a biological oceanographer at Louisiana State University.
"It will probably get stranded if it gets to the upper estuary, and it's very difficult to clean there," he said. Right now, a big eddy that's spun off the Loop Current is still blocking oil from entering it, and it has moved south _ away from the oil, Cowan said, but scientists say it's not possible to predict exactly where winds and currents will drive the oil. Less is known about where the oil may already be going in the western part of the Gulf. Scientists don't know if there are any big plumes of oil under water to the west of the leaking well, although it's reasonable to suspect that there are some, Cowan said.
The oil already is spread along 100 miles of the Louisiana coast, and the coastal current could take it west toward Texas and an area where two deltas have been building since the 1970s. There, freshwater marshes would suffer even more damage than saltwater marshes do; freshwater plants could be devastated. Storms or other changes in the currents also could send oil toward sensitive saltmarshs, killing fisheries and other animal life. "It's a nightmare that just won't quit," Cowan said. He's spent his career researching fisheries production and ecosystem management, but he now sees nothing ahead but studying what the oil is doing to the Gulf. "I'm 54, and I never expected I'd spend the rest of my career dealing with oil spill issues," he said.
Steiner, the Alaska scientist, said that while the shoreline has gotten the most attention, the damage from oil plumes under the Gulf's surface would be extensive. "A lot of this oil has yet to surface, and so it's formed these huge sub-surface plumes," he said. That oil will devastate marine life that’s sensitive to contaminants from the sea floor to the surface. The Gulf, he said, is a critical spawning habitat for many large fish species such as bluefin tuna and blue marlin. Eggs and larvae from such species probably already have been exposed to toxins in the oil and the chemicals BP has been using to disperse it.
"There is a lot of oil going into the sea there," he said. "It does degrade over time, but before it degrades it is toxic, and it wreaks havoc." The dispersants also could have unintended long-term effects. They've never been used at such depths, and never in such huge amounts, said Crowder of Duke University. The dispersants seem to be keeping most of the oil offshore, but they're driving much of it deep underwater. The chemicals have never been used in water as cold and under as much pressure as there is at this leak a mile below the surface, he said.
Rachel Maddow: The more spills change....
91 comments:
I think Matt Simmons actually said (meant) 900 days. He kind of mumbled it. I listened to his interview several times and came to that conclusion.
That is still mind-boggling and gives me the "frissons".
And you are right the ramifications of the spill are much greater than being discussed by the press.
Cheers,
Robert
The good news is that the gulf recovered from Ixtoc, more or less.
The bad news is that we now have a significantly higher concentration of CO2 in our atmosphere, the fisheries are 90 percent depleted from plain old overfishing, and human population is half again what it was then.
The gulf can't take many more Ixtocs
A response to the Ambrose Evans-Pritchard article: Spain Is Trapped In A Pperverse Spiral As Wage Cuts Deepen The Crisis
First, in reply to the Pierre Lellouche quote: "It is expressly forbidden in the treaties. De facto, we have changed the treaty", it is important to realize that a crisis arose from interest rates rising on Greece's sovereign debt that threatened to the value of the Euro, FXE, and the stability of European Financial Institutions, EUFN, requiring the European leaders led by Herman van Rompuy and Angela Merkel, to meet in Summit in May, and announce an agreement to stabilize the Euro, by providing seigniorage aid to Greece. The Leaders' Announcement did not "change the treaty" .... it superseded the treaty !!!
Glenn Beck in Video and Transcript Press Release relates that our leaders are laying the foundation for global governance and he documents this with the Stephen Harper quote "In a globalized economy, we are going to have to take global responsibilities." The leaders are taking on responsibility for global governance, a case in point is the May 2010 Europe Summit of Finance and State Leaders who funded the Euro Stability Pact establishing European Economic Governance, a common European Treasury to sell debt, to buy distressed sovereign debt and provide seigniorage aid for Greece, and to commission Herman van Rompuy to lead a task force to discuss and suggest policies and mechanisms to further stabilize the Euro.
The EU Finance Ministers’ Summit announced a sacrifice of national sovereignty to preserve the integrity of the Euro. The Leaders’ announcement established a unified economic, political, fiscal, monetary and seigniorage government for the entire eurozone. The age of sovereign nation states in Europe is history; global governance has commenced.
Yes, European Economic Governance has commenced. A region of global government has coalesced; one of ten as envisioned by the Club of Rome in 1974, this being documented well by Wikipedia.
Earth Times reports that the European Commissioner For Economic Affairs, Olli Rehn, warned Tuesday May 25, 2010 at the Brussels Economic Forum, that the European Union risks economic stagnation and mass unemployment unless its member states pursue "ambitious structural reforms in the coming five years." Mr. Rehn stressed those plans could be enacted without time-consuming amendments of EU treaties, "which is important because we have a sense of urgency and we do not have the luxury of time."
Herman van Rompuy believes a Crisis Cabinet is the Missing Link in the Eurozone Crisis debate.
The President of the European Council Herman van Rompuy proposed a “crisis cabinet” reports Honor Mahony of the EUObserver on May 25, 2010 in article Van Rompuy Wants Clearer Hierarchy To Deal With Future Crises. He said that “there is not much hierarchy or organic links between the main players and the main institutions”.
European Commission President Jose Manuel Barroso, the head of the European Central Bank Jean-Claude Trichet and Mr Van Rompuy himself would be the Triumvirate in this “crisis cabinet”.
And Honor Mahony again reports that at the same time the President of the European Commission, Barroso, called Germany’s plans on improving economic governance in the eurozone as “naïve”. He believes that any treaty reform is not feasible in the moment.
Secondly, Mr. Evans-Pritchard in writing this article and stating "This can end only in two ways. Either Germany tolerates massive monetary reflation by the ECB, or Spain will be forced out of EMU, setting off a catastrophic chain-reaction through north Europe’s banking system", gives the Clarion Call for investing in the safe haven of gold; while one could invest in the gold ETF, GLD, I personally am invested in gold coins.
At least now the media coverage of the Oil spill has been more honest where at first it was basically out on "ignore". On "Meet the Press" on Sunday the Obama Energy secretary was on and a few things jumped out at me:
-David Gregory is a useless clown, Tim Russert maybe was the last real journalist in the MSM
-The Oil spill mis still being played off as a political game; did Obama do enough/too much/bla bla bla. I'm sorry, I asm of the opinion that this is a major calamity and not a time to play politics as usual.
Add to this, smoke from forest fires in Quebec have blown all the way down here to Massachusetts and my eyes are really bothering me. Just seems like no matter wheer you look everything is a mess.
"Just seems like no matter wheer you look everything is a mess."
Quoted for truth. It's a sad spring this year.
To all UK posters and lurkers out there: Please attend one of Stoneleigh's tour venues in early June. Anyone within reach of the Midlands area can come to our Coventry meeting. We'd love to meet more local TAE readers.
For me, there's nothing more reassuring than meeting new people who are not trapped in the "matrix" where limits of thought are bounded by what's in the mainstream news.
It's what gives me my hope.
I have been reading TAE pretty much since it started and have been using the arguments here to try to warn other people I can reach. I've had some success. There's a psychologist friend of mine who I tipped off a couple of years ago about a forthcoming serious downturn in the markets. It arrived on cue when I said it would. I've invited him to come and meet the real source of the wisdom when Stoneleigh visits.
If need be, you can contact me at:
stoneleighvisit@transitioncoventry.org.uk
James
Since I am out of lurk mode for the day:
I went to the Hay festival in Wales last Saturday, mainly to see James Lovelock who came up with the "Gaia" theory of climate self-regulation in the sixties.
I had understood that his position was that we were in danger of bringing the world into a runaway positive feedback which could take us past a "tipping point" where the planet would become uninhabitable for most life.
In his interview with Rosie Boycott, he seemed to back down from that, saying he didn't like the concept of "tipping point" and that the planet would just find itself a new equilibrium with a slightly different climate. It would be nearly impossible in his view, for us to kill all life on the planet.
Rendering the planet unable to carry more than a billion humans though, and creating uninhabitable deserts expanding from the equator, seems to him to be a real risk.
He's very worried about mass migration out of lower latitudes.
I think he reckons we'll largely remove ourselves from the planet and it'll "recover" after a while.
He's 92 and still pretty sharp and was having fun during the interview, giggling away in between delivering the news. He remarked that it's most important to enjoy the time between birth and death!
Please, please, please stop with the "It's all Obama's fault" routine. It's getting old, tired, and obvious.
First you complained that he wasn't taking responsibility and the government should have taken over on day one... when we all know that he govt. does not have the technology to deal with this. Only the oil companies do and they have ALL been there from day one.
And if the U.S government had sent in the military and taken over the site I'm sure you would have screamed fascism!
And now that he has verbally taken "full responsibility", it's still his fault because he wasn't there fast enough. Because if he had been there, the well never would have failed in the first place.
Give. Me. A. Break.
I really like this site, but you've been against President Obama from day one. And I should know... I've been at this site since before he was elected.
A question to the oil experts
Will the oil stick to the hull of ships passing through it?
If the oil sticks, how do you clean it off?
Where is the clean up going to occur?
Where will the inspection take place?
Will the oil end up in your sea port?
jal
Many readers here will be interested in following the scientific research ongoing in the wake of the Deepwater Horizon catastrophe in the GOM. There is a team of University of Georgia marine scientists conducting research on the huge underwater oil plume that was discovered in the aftermath of the Deepwater Horizon oil rig explosion. Throughout a two-week cruise in the Gulf of Mexico, they are posting regular updates and photos at:
http://gulfblog.uga.edu/
The latest findings (as of 30 May) were posted today and confirm the existence of the oil plume in the range of 1000m to 1300m in the water column. The plan was to lower a camera today, and hopefully post video of the plume tomorrow.
It has been a recurring insinuation in Ilargi's writings, and most recently expressed as exasperation by blogger Carpe Diem, that there hasn't been more "expression of dissatisfaction" in the American body politic. Personally, as a supporter of the SDS in the 60's, I have long been disgusted by the near universal sellout of my contemporaries.
So for all of us bewildered by the lack of liberal reaction in the American public, Chris Hedges has a new manifesto, This Country Needs A Few Good Communists which goes a long way in explaining why there isn't more demonstrated outrage from the citizenry of America.
"The liberal class prefers comfort to confrontation. It will not challenge the decaying structures of the corporate state. It is intolerant within its ranks of those who do. It clings pathetically to the carcass of the Obama presidency. It has been exposed as a dead force in American politics. We must find our way back to the old radicals, to the discredited Marxists, socialists and anarchists, including Dwight Macdonald and Dorothy Day. Language is our first step toward salvation. We cannot fight what we cannot describe."
Erltonsquire,
If you think we've been against Mr Obama since day 1, you might want to re-read Bittersweetness.
Mr Obama accepted the poisoned chalice the day he won. Presidents have little freedom of action, and anyone who presides over depression will be treated harshly by history unfortunately.
Question 1 - Stoneleigh what kinds of unemployment levels do you think we will see in some of the most debt-riddled countries in Europe, such as Italy, Ireland Spain and Britain? You have indicated that these countries will likely be impoverished. How exactly do you see these countries looking once deflation has run its course? I am a citizen of Spain and am trully worried about the prospects for Spain (and much of the other countries).
Question 2 - Do you see Spain getting kicked out of the Euro or leaving it? I actually hope they do, since devaluation is the only way to attain equilibrium for Spain.
Question 3 - As screwed as Spain is, do you think Italy will fare better? I have considered moving there, since I want to move back to the Mediterranean but am really worried about Spain (and their 20%+ unemployment).
Thanks
@ erltonsquire
I am sorry but I just have to say that nothing pisses me off more these days than partisan delusionals such as yourself. Truly pathetic. Why would you even bother to take the time to defend Obama or any scumbag politician for that matter? Do you really think he gives a rats ass about you or your family or do you just get off on sucking up to power? Maybe you have a fantasy in your head of one day being rewarded by the Chosen One for your loyalty, who knows.
It always amazes me when I see or hear ordinary people take time out there day to actively defend "leaders" who are purposely and diligently working (whether by design or not makes no difference) to run them into the ground. The fact is that none of these motherfrackers from either party have your interests at heart(quite the opposite, actually). Your defense of the supremely powerful looks as pathetic and sad to me as a beaten down slave declaring his fealty and submission to his cruel task master with his last breath.
And anybody who is looking at things from a left-right worldview has no credibility and it is those who hold such views that are very much part of the problem. (Hint: Look in mirror.)
This isn't some game and Obama is not on your "team" no matter how desparately you wish to cling to such a ridiculous fantasy. Have some self respect, learn to think for yourself and open up your eyes to the world around you. It's really not that difficult.
Last post someone linked to a video on the NOAA site about ocean currents. Very nicely done, educational. It said that the North Atlantic Gyre, which includes the Gulf Stream as it's eastern segment, takes about ten years to make one round trip up to Europe, down the coast to North Africa and back across the mid Atlantic to where it started.
Assuming that The Plume doesn't get safely vacuumed up into waiting supertankers by BP shortly (to recoup drilling and law suit costs, not to protect the environment) in a miracle of sudden private sector competence, it probably means The Plume will enter The Loop in ernest and get sucked up into the southwestern segment of the North Atlantic Gyre (the Gulf Stream) and begin it's Carousel ride.
I imagine after hurricane season the whole Gulf will be one big toilet bowl of toxic sludge and would seep into the Gulf stream for many, many years.
The ten year round trip for the North Atlantic Gyre would have the first of the spill meeting up with a still toxic Gulf of Mexico ready to inject and infect the whole Atlantic current system for decades.
The full damage will be stretched out over such a long time frame that it will be going full tilt boogie well into the collapse/deflation timeframe when absolutely no money or credit or assets will exist to deal with it.
The War on Poverty was a failure.
The War on Illiteracy was a failure.
The War on Drugs was a failure.
But it looks like the War on the Environment is a huge success.
Mission Accomplished
.
@ Erltonsquire,
I must put in my two cents ...
There is NOT ONE person in charge of EVERYTHING.
We are not living in a dictatorship, and if we were, delegation of responsibilities are also prevalent in that system.
I was about to scoff at Ilargi's notion of Gulf Coast states losing 50% of their $2.2T economy as a hyperbolic overreaction. How much of those states' economies is dependent on beaches and fishing, anyway?
But when you mentioned housing, yeah, I could sorta see that happening. Maybe not 50%, but 20%, one-third? Possible. Since housing is such a crucial part of the modern American eCONomee, anything that makes people less likely to move to a region that will be known as a toxic, stinking wastewaterworld is going to have ripple effects. Bigger than the ripples that would be made by forcing BP executives to walk the plank over the edge of their offshore rigs.
I can't wait until protesters start splashing BP execs with gouts of the oil-soaked seawater they created.
Excellent post. Few will admit to the possibility that the relief wells fail, everything fails, and the gusher goes unabated for years, the earth's first oil volcano.
What do we have to look forward to in the worst-case scenario? 2-4 billion gallons of oil bubbling up over years, killing off the Gulf of Mexico, much of the Caribbean, the Atlantic, and of course the southern economies.
A high-profile petroleum expert, Tad Patzek I believe is the name, said there was a 90% chance the relief wells succeed. Of course, relief wells have never been tried at this depth, and Patzek said he wouldn't even ponder the 10 % chance of failure. Too much to think about it. It would be a "disaster heretofore unseen by humanity."
In other words, the end.
Stoneleigh,
Okay, so I read Bittersweetness. And it verified my statement... you have been criticizing him since day one. Albeit a little more sweetly in the Bittersweetness post, but criticism nonetheless.
I believe you are correct about presidents having limited ranges of action. And unfortunately, Andrew Jackson would never be let near the reins of power today.
And to be honest with you, this administration has does a lot to open my eyes as to how little this and any president actually has power to control things like banks and corporations. And I agree that things are going downhill. But they would have gone downhill no matter who we had elected, so I guess it just peeves me how constantly Obama gets whacked around here.
Frankly, I just want him to finish out his term and not get elected for another term b/c I fear that the wheels will have completely fallen off the bus by then, and I don't want America's first black president to be blamed for the next depression. He means too much as a symbol.
Keep up the good work. I learn a lot around here.
Sorry Ilargi,
My late night humor got the better of me!!
Keep up the good work!
;)
Two earthquakes today...one in the Phillipines, one in Costa Rica - both around 6.0. Last week 2 volcanos in central America (?) and one just erupted under the ocean somewhere as posted in todays news.
Seems like the Mayans may be right and these are all signals from another world. I read that it will take about 2 years for the oil/dispersant to circle the globe. Thats 2012. Maybe the world will not end but maybe 2012 is the tipping point on all fronts.
Cheerful morning thoughts.
:)
@ Wolf.
Great rant, agree 100%
also vis a vis the vast majority of UK public, on bended knee to the great westminster.... "they'll save us, they'll save us" WILL THEY F..K, the self serving vermin will steal the sugar from our tea to make sure their expected entitlements continue, and they will do it right up until the bitter end. F..k them all.
I'm angry , better donate.
Z.
@ Erltonsquire
BTW My response to Wolf is not an attack on you, I don't know you from Adam after all, but on the the many millions of brown nose sycophants I have the misfortune to share my island with.
I just want it to RAIN.
Z.
erltonsquire wrote:
And I agree that things are going downhill. But they would have gone downhill no matter who we had elected, so I guess it just peeves me how constantly Obama gets whacked around here.
Obama ran on a platform of "change." Nothing has. Same old, same old. That Obama is disparraged is no one's fault but his own, and based on the performance of his and his Demoratically-controlled Congress.
Frankly, I just want him to finish out his term and not get elected for another term b/c I fear that the wheels will have completely fallen off the bus by then, and I don't want America's first black president to be blamed for the next depression. He means too much as a symbol.
Which was my rationale that his performance would be solid. I was obviously wrong.
Nice article today on CNN.COM by Celine Cousteau
'A call to save our seas'..
what's left to save that is.
There I was joining the rants and rage against the US administration/Obama/BP until I read an article by Mathew Wild on the Energy Bulletin:
" Deepwater drilling going ahead despite ecodisaster"
http://www.energybulletin.net/52947
Apparently Canada is soliciting bids for off shore drilling in the Artic as we speak!!!
Where else on the planet is deep sea drilling business as usual. Plugging the leak in the Gulf may not provide the sigh of relief we all seek.
Hate to say this folks, but we are still hell bent on a path to disaster and I know not any force to arrest our human addiction to energy.
Erltonsquire,
I don't want America's first black president to be blamed for the next depression. He means too much as a symbol.
I don't want to see that happen either, as the consequences for racial harmony could be catastrophic. Unfortunately, however, circumstance dictates that is exactly what will happen. Anyone elected at such a time takes the blame, whether or not it can plausibly be construed as his fault. Look what happened to Hoover's reputation.
The two candidates at the last election were fghting over the poisoned chalice. I think it's very unfortunate that Mr Obama won at this particular time and is now in the line of fire. I actually feel very sorry for him and especially his family. I don't think he has any idea what is about to hit him politically. Unfortunately he encouraged people to believe he had the power to change things, which he doesn't. It is very dangerous for politicians to believe their own propaganda and willingly step up on to a pedestal. It just means they have further to fall.
Whatever one may think of current events, it actually makes little sense to focus on blaming the president, as his actions are so constrained, and events are so dependent on long term socieconomic moves that precede his term. The system is larger than any man and it is simply broken. A blame game won't help anyone. Sadly nastier and nastier blame-games are exactly what increasingly angry people engage in in such times. I always suggest that people save their energies for more constructive purposes that can actually benefit their loved ones.
Mr Obama is in the wrong place at the wrong time. All he can do is cheerlead while presiding over a schlerotic and dysfunctional system that is completely unresponsive to the needs of the populace. Such a system can no longer do anything constructive. Sadly the destructive power that remains is still being deployed, and probably will continue to be so on a wider and wider scale. Tragically, this will be Mr Obama's legacy, whatever he personally does or does not do.
@ erltonsquire, etc.
President Obama is not different of course from any political leader who inhabits the leadership offices of a rotting empire. Words words words...but no true relief for the little man (woman, etc.) BUT, I understand your frustration. There is surely lots of 'blame' to go around, and I would concur with those who argue that the political 'Right' is scapegoating Obama for the crimes of his predecessor.
As for BP...they of course will not be compelled to remunerate the poor souls whose lives have been summarily destroyed by this cataclysm. BP will cry fiscal uncle, and the government will step in and create a few billion more fiat dollars to pay off the would-be-growing ranks of angry Americans.
I ask you: how do the government's efforts to kick-the-can down the road with regard to our debt-saturated system differ from the government's efforts, in the 1960s, to temporize the fury of the inner-cities through facilitation of the heroin trade?
one thing I believe is this: the CEO and other executives at BP should be forced to surrender ALL of their individual wealth and assets, and they should be forced to move to the Gulf Coast and to live in oil-speckled squalor for the remainder of their days on the planet.
Here's some great TA for those interested.
http://www.safehaven.com/article/16971/the-looming-financial-holocaust-is-closer-than-we-thought-
Z.
@Wolf
First class rant, two snaps up. I especially loved the term 'partisan delusionals' to finger the mindset of people who still buy into the unevolved adolescent flimflam Punch & Judy Show of political kabuki run by the Ministry of Propaganda.
Mike Ruppert singled out the same type of Sheeple in his recent Vermont address by referring to them as Zombies. He said something to the effect that he didn't want any Zombies in the lifeboat with him. He wants to help the reality based folks endure and not waste time on the false dualism of national 'politics'. Too much to do, to little time to do it in to engage in Zombie debates while the roof is on fire.
I agree with Stoneleigh that the presidency was a flaming bag of dogpooh the last election cycle. It was utterly obvious to any thinking adult also and begs the question, why would any thinking adult pursue it.
President O'Puppet knew it too and still suited up for the ride. There are no excuses for his giving the keys to the financial car to the Wall St Mafia Predators. There is no excuse for him giving the keys to the War Machine to the Military Corporate Mafia. There was never a credible plan to create stable sustainable long term jobs, never, not even from day one. Just another Big Fat Lie.
And the Ecopocalypse commencing in the Gulf serves only to showcase his Total Impotence as a 'leader' to the world at large.
John McInsane would have been even worse but the Kriminal Klass needed a master of sophistry and John didn't cut the mustard.
Obummerman is a figure like Faust.
In a delicious irony Faustus in Latin means "auspicious" or "lucky".
We'll see.
I'm pretty sure Mephistopheles, like many, doesn't suffer fools gladly...
.
@Stoneleigh - nastier and nastier blame-games are exactly what increasingly angry people engage
My first reaction when I read Hedge's article was, "here we go again". As in, at the risk of invoking Goodwin's rule, the last days of Weimar with Communists & Nazis engaged in vicious street fighting for control of the collapsing republic.
As it turns out, each faction needed the other to galvanize their own core support. So too will be the vilification of Obama. The chief danger won't be those who are actually angry, but those who cynically exploit that collective anger for their own purposes.
It's almost like a fixed wrestling match, where each opponent is actually completely rationale & in on the scam, but appear to be raving lunatics ranting & screaming to the applause of the cheering audiences.
Beware the masters behind the game.
“Why won’t they get off their fat asses to protest ” and “ how do TPTB keep extend and pretend balls up in the air” are two of the most disingenuous sentiments expressed on this and other economic blog sites. Not to single anyone out, but a prolific poster recently informed TAE readers that he is basically rolling in cash, that times are good again. And of course Stoneleigh is busily engaged in a tour to warn the world--that requires money and must be a fairly lucrative endeavor for such an educated and in-demand talent -- while Ilargi stands on the cyber-street corner with a “Brother, can you spare a dime” donation plea--I seriously doubt TAE would be soliciting the poor and downtrodden. Still others write of their multi-acre farms and expat endeavors shouldered by sound investment practices. Moreover, I strongly suspect that the majority of TAE posters are educated professionals and economically stable land owners. Indeed, it sounds as if some are even offering vacations in the splendor of France. In other words, a rather distant viewing of the impending “collapse“ that is just about as intimate with protest as the apathetic couch potatoes they castigate. But at least the apathetic ones have an excuse: they are predominantly unaware.
No, the TAE crowd has far more in common with the integral component of the propped up housing market courtesy of TPTB--the homeowners themselves. Deep down, and in a quiet moment all alone with nothing but their honesty, they too will admit a desire to cash out at the apex of a bubble. If, for no other reason than to set themselves up ( read the same “I got mine mentality’ that inflated the bubbles in the first place) for when the moment of collapse arrives. All the while waving condemning fingers at ‘the other guy” for not getting off his butt to protest.
It’s the vicarious stage mother wincing at daughters every ballet move from behind safe curtains; it’s the father yelling at his son from the distant seats of a little league baseball game.
Go ahead and be General Custer if you dare.Vicarious others will always be around to enjoy the spectacle when General Courage finally decides to act.
@ Jal
The amount of oil being dragged into ports and inland depends on many factors, not the least of which is the viscosity of the petroleum hydrocarbon compounds present in the Gulf. Petroleum hydrocarbons are a incredibly varied group of compounds, ranging from low molecular weight Benzene, Toluene, Ethylbenzene and Xylenes to long chain, heavy bituminous tars (and everything inbetween).
The immediate risk to people attending a spill tends to be related to the highly volatile, low molecular weight compounds; these tend to be the compounds that cause acute risk to people who are exposed to a spill, as they are highly volatile. But while they will continue to roll across the landscape in carcinogenic plumes, they will be the first of the hydrocarbons released in this spill to dissipate.
(Quick aside; can I please recommend the acquisition of a respirator capable of filtering VOCs (Volatile Organic Compounds) if you are in the firing line of these organic plumes. Get one fitted, and learn about VOC cartridge life if you are in the front line in any of these coastal areas. I can't advise more than to do your own research, but also to understand the issues associated with chronic exposure to Volatile Organic Compounds.
In terms of the potential for dragging oil and sludge up into sea-ports, I'd like to hope that measures are in place for appropriate management of the risks associated with heavy sludge adhering to the hull of ships, but I have enough experience to know that these issues are placed on the Monty Python equivalent of the 'Lower Peg' when it comes to priorities. This may also sound callous, but the vast majority of major sea-ports across the planet are riddled with heavy metals, hydrocarbons, dioxins, PCBs and a tasty suite of biocides including organotins, organophosphates and organochlorinated compounds. In one study we found balls of mercury lying in sediment in one of the 'cleanest' ports in the world.
The management of petroleum hydrocarbons won't go beyond application of surfactants to scrape the sludge from the base of the ship hull, where it will then form tiny balls of detergent-encapsulated long-chain petroleum hydrocarbons.
So, to cut a short story long:
a) I'm not sure how much of the oil will adhere to the hull of the ships passing through this area. This will depend upon viscosity, the depth of the longer-chain petroleum hydrocarbons (which appear to be tens of meters below the ocean surface) and also the route of the ship.
b) Some oil will stick. Surfactants will then be used to remove the oil; most likely there will be stations set up at various points much like quarantine stations to manage and mitigate the amount of petroleum hydrocarbon being dragged into local rivers and sea ports. Whether these are well managed and placed at strategic locations remains to be seen. The surfactants will create a completely new issue in these more limited estuarine systems, creating a higher density of suspended bubbles of petroleum hydrocarbons, but that's not really high on the list of what to lose sleep over in terms of 'things screwing up the planet at the moment.
c) and d) depend on your local jurisdictions.
Pray that they have someone in charge who has an iota of sense and is capable of choosing areas that will mitigate/manage further upstream contamination.
Each of these will require individual assessments regarding the specific sea port, the tidal regimes, sensitive ecosystems, local resource requirements...
I hope this has helped.
Ant.
M,
Stoneleigh is busily engaged in a tour to warn the world--that requires money and must be a fairly lucrative endeavor for such an educated and in-demand talent
It is not lucrative, and was never intended to be. I will never exploit the fear or misery of others for personal gain. I do what I do on a shoe-string, deliberately. I travel by driving a little fuel-efficient car or get rides with people who are going my way. Last week I managed to avoid the cost of Amtrak by taking the Chinatown bus from NYC to DC. I stay with readers wherever possible (which is far more fun than hotels anyway). I will sleep on sofas or camp in people's backyards if necessary.
I am managing to cover my costs so far, but I have no illusions about replacing my former (modest) salary, let alone enriching myself. I do not charge fees. People are free to make a donation if they can afford it and choose to do so. If I am lucky, I walk away from a talk with a tenth of what I understand Derrick Jensen's speaking fee to be (or one fortieth of what Ann Coulter is paid for her one hour rants).
It is easy to be cynical. Please remember that not everyone is out to fleece people. I am trying to provide a public service here.
Thank you Ant Whisperer
It seems that we, everywhere, will be stuck in oil and related problems far longer than most people realize.
Black rain is another potential problem that was brought up.
I do not shed too many tears for the local fishermen.
They are a resilient bunch. Those that are making $3,000.00/day using their fishing boats will also end up getting monetary compensation because those boats will be unsuitable for catching sea food.
Those boats could be condemmed by the FDA.
I wonder if there are procedures, by the local marinas, for preventing "oil clean up boats" from docking and "polluting" pleasure crafts and other fishing boats.
I would not allow them in my marina. (if I had one)
jal
Stoneleigh,
I think you’re missing my point. When people have skin in the game, or believe they will have skin in the game once again, they’re far less likely to risk it all via political dissension--IMO. My post was directed at this feigned sense of befuddlement regarding why people do not protest. Beyond that, most people suppress their own sense of retributive urge in the name of their children. What good is a Dad in jail?
My larger point is people do not protest because they still have much to lose, just like the majority of economic blog participants.
As far as you and Ilargi personally, I hope the two of you make millions--it would signify a healthier realignment of societal priority.
Stonleigh do not waste time responding to the likes of "M". Let the trolls crawl back under the rock they came from.
Please do not take such infantile remarks to heart. It is not worth the time and anguish.
I happen to be one of those you will be visiting overseas and I and others look forward to it.
I believe you are sincere in your endeavor and do not think for one minute you are running a scam.
Cheers,
Robert
NOAA speaks to the potential of "Black Rain" today. A glass half full assessment, if you can believe anything that any government agency says any longer.
http://tinyurl.com/2dc9arf
@M
“Why won’t they get off their fat asses to protest ” and “ how do TPTB keep extend and pretend balls up in the air” are two of the most disingenuous sentiments expressed on this and other economic blog sites.
-------------------------
You are right, but which catastrophe shall we take to the streets over? There are so many now, that it boggles the mind. Personally, I find financial collapse to be secondary to our possible upcoming extinction event, where we poison ourselves in our own filth to keep the SUV running cheaply. Both are probably going to go hand in hand.
My father's favorite saying:
When in doubt, run in circles, scream and shout?
My mother's favorite saying:
Can't you just go along to get along?
I think America vacillates between these two ideas, and going along always wins, because it is the path of least resistance, and has the greatest emotional payout.
So Ilargi is not a proponent of operation overkill. Its admittedly not the safest or cleanest of methods, but given just the right conditions, if available, it has a good chance of working as intended, given rightful intent.
Certainly the sheer magnitude of kinetic energy released appears appropriate for particular types of unprecedented pressure problems, if seabed consistency and stability would allow for it,
the problem would not be radioactivity but controlling the blast effects to some extent.
Given pre-existing yet unforeseen tectonic instabilities and unusually disasterous number-fumbling, a perfectly discordant, misdirected or vastly disproportioned nuclear blast may create such rampant explosive fissures that the entire field should equalize pressure within days instead of years, either discharging the same eventual volume somewhat more quickly, or even greater total volumes by pressure compaction of the reservoir strata, or causally triangulated nullification of all subsequent possibility of effort,
while causing series of quakes, tsunamis and triggering extensive volcanics throughout the region and beyond why not.
I suppose the radioactivity should also be much worse than anticipated, and the surface slick could explosively ignite somehow, then hurricanes proceed to shower oily globules laced with mutagenic corexit all over the western hemisphere. Something similar would constitute an acute extinction event, likely killing hundreds of millions within a decade or two.
However, a goodly nuclear detonation may ironically and suspiciously remain the only method known to exist and physically capable of preventing this particular chronic extinction event, if there was absolutely positively no other way of sealing these ruptures and avoiding a full discharge so large and sustainable as to amount to slightly slower megadeath, perchance involving a ghawar-sized elephant down there.
Considering the chance of success was decent, with little or negligible radioactive contamination, whereas the proportionate certainty of apocalyptic backfire was reasonably minute, then it may still be logically and ethically valid to attempt it, as success could concievably prevent the cumulative release of a billion barrels or so, depending on flowrate, saving millions of lives and trillions in damages.
Where there definitely remains a chance of increasing the velocity and absolute quantity of horrid doom by misnuke, it may not be ethically or morally justifiable to reconsider such an approach but as an absolute last resort, depending on divergent flowrate/fatality ratios, or until after the relief wells fail to significantly slow the flowrate when they're completed.
M,
At a certain point it's no longer an issue whether you have no idea what you're talking about, or you do know but don't know how to put it in words.
Regardless, that riposte just now easily goes into the file of 'least sincere in a long time'.
You enjoy creating the image around here that Stoneleigh and me are out for people's money, as you once again confirm with: "As far as you and Ilargi personally, I hope the two of you make millions...".
And I let you, I neither rejected your initial comment nor this one, because I wish to have faith in the judgment of our readers.
"I seriously doubt TAE would be soliciting the poor and downtrodden..."
No, precisely, we don't. But we represent them a hell of a lot more than we do people like you. And our readers help us do that.
".. a rather distant viewing of the impending “collapse“ that is just about as intimate with protest as the apathetic couch potatoes they castigate. But at least the apathetic ones have an excuse: they are predominantly unaware."
No matter what you say, you are describing yourself here, not us. You are the bloated potato.
.
@ M said,
" I strongly suspect that the majority of TAE readers are educated professionals and economically stable landowners."
For sure neither Starcade or I fit that profile. Nor are Starcade and I cowardly couch potatoes. We both have managed so far to call up a cognitive over ride to cancel the urge to violence and revolt.
Your comments brought to mind long ago days in high school at the time of the Russian takeover of Hungary. My teacher then was a world watcher and spoke a phrase that was new to me," Better red than dead".Two teen-age girls joined the class who fled to Vienna arriving in Canada with only the clothes on their backs.
Those with means to do so can flee to other more sympatico countries. Those like me will have to stay put and survive the sqeeze. I don't see how being shot or beaten by the police will stop the heist of the century. If it would many of us would sacrifice self for the sake of the commons.
Especially the seniors amongst the TAE community.
I was particularly saddened to read your mean spirited words towards Ilargi and Stoneleigh.
@ Zander: I've got your back <a href="http://www.safehaven.com/article/16971/the-looming-financial-holocaust-is-closer-than-we-thought->here</a>
We'll see if the link works--never sure.
Drought in Scotland? Not on the news.
Linda
To follow up with more of Matt Simmons.
Here is a podcast from this weekend with Jim Puplava and Matt. Matt is of the opinion the BP well head has blown and the spill rate is actually 120,000 BPD; with a 12 year potential spill rate; and that BP is more than likely drilling their "relief" wells in the wrong spot. This guy is scarier than Kreuger and Lecter combined:
MattSimmonsListen
Automatic Abaddon,
flowers for Apollyon.
This is truly my last post here at TAE as I have decided go permanently off-grid and will be spending my precious internet access on researching other topics. For the most part, I’ve gotten a good enough handle different economic perspectives for my needs.
However, I want to address M’s comments before I go. My family has a long history of protests in the US. I personally chose to stop demonstrating when I saw how Amy Goodman, a Pultizer-prize winning journalist, was treated at the RNC before our last elections. She and her staff refused to be embedded with the police because she wanted to cover the story from the opposing perspective. I watched her arrested from Indynews on the internet and did my best to send word to a couple of other online journalists because I believed the Fourth Estate had a vested interest in what went down.
Much of the critical comments you are leveling here echo thoughts I have had at numerous times reading this blog. I am an unemployed homeless person who has been concerned about the growing levels of apathy and violence directed towards homeless persons in the United States as this economic crisis has unfolded. I also sometimes work in small communities volunteering on farms, in senior centers, sometimes assisting homeless teens and just generally lending a hand to other people having difficulties.
One of the main reasons I’ve followed TAE so closely the past year or two has been because blog founder, Ilargi, has loudly and consistently raised the issue of how a society treats it’s weakest members. He frequently posts news stories talking about the falseness of unemployment statistics, shadow mortgage inventories and the treatment of homeless people that pierce our illusions about how great things are out here in the streets for many people.
I disagree with many of the comments that are made here including at times those made by Ilargi and Stoneleigh. On the other hand, I’ve learned a lot of valuable information by following this blog that I’ve passed along to assist other folks during the course of my travels. As far as voices of dissent on this blog go; however, I hope TAE never devolves into nothing more than a group of “people who finishes each other’s sentences” as someone suggested the other day. That is disrespectful and absolutely not very democratic.
While I personally haven’t made friends with any regular commenters here, I would still invite Stoneleigh to talk in SW Oregon should she decide she had an interest to because going personally into communities to share ideas face to face with folks is a worthwhile endeavor. As far as donations go, I’ve holding out $1 a month to go to BP’s cleanup fund should they ever plug the leak as part of a big stick, small carrot incentive that I doubt they even notice. Should they fail to entirely, then I will donate it to put a teacher back to work.
Adieu,
WgS
@M
I don't tick a single box in that comment, not one, I'm a working class landscaper who hovers above the pverty wage level.
I, lets say "took part" in the more energetic protests against the poll tax here in the UK. it worked.
I protested quietly against the Iraq war. it didn't, horses for courses.
This time, rightly or wrongly, I don't believe anything will work - protest wise, this one's a foregone conclusion, and it ain't finishing pretty, so I'm gonna enjoy what I've got left of the good times and withdraw from as much of the madness as I can whilst doing so.
Don't you realise what you've got here at TAE?? educationally and communally, such a broad spectrum of society and like minds represented here might just be the right group of people in our various areas to continue what will be left of our world when it all turns to shit. I'd rather be left with us lot and our like than the cretins (many exceptions) who inhabit my day to day living at the mo. Wise up man.
Z.
These are times of profound disillusionment. If one has lost faith in the ability of the system and its institutions to respond positively to anything other than large amounts of money then protest is largely a waste of personal time and energy. Rebellions and revolts by abused and angry people are clearly in the offing now. But the era of revolutionary fervor in the service of ideals -- so 19th century -- is but a tired and poor farce in this brave new millennium.
The latest attempt to install the Low Marine Riser Package (LMRP) has failed. BP is off the job, except for the relief wells. The current failed well will continue to spew oil, at a rate of tens of thousands of barrels per day, into Gulf of Mexico for a minimum of 6 more weeks and possibly far longer. The Pentagon is now drawing up "worst case" scenarios that involve the evacuation of the Gulf Coast states in varying degrees including up to 500 miles inland.
A 500 mile evacuation of the Gulf States would mean nearly a quarter of the country evacuated, at least 40 million refugees (I may be somewhat low there), and the final nail in any economic "recovery" rhetoric.
And that doesn't even take into account the famine implications of "black rain" falling in the plains states. Mad Max had it good compared to where we're going.
@ erltonsquire
"First off... watch your mouth when you talk to me."
Sorry no..... it doesn't work like that....you don't get to dictate the terms of anything to me or anyone else.
"So, if you want to have a real debate without all of the name-calling, faux-outrage, and cheap shots, let me know."
No thanks...it would be a waste of my time and yours. I'll just keep calling it like I see it and I won't lose any sleep over offending those that choose to defend our "leaders".
WgS
I'm not sure what your complaint is.
Wolf,
I don't know who let that stupid comment through, it wasn't me. Personal attacks for me are non grata.
.
Jal asks:
A question to the oil experts
Will the oil stick to the hull of ships passing through it? Yes.
If the oil sticks, how do you clean it off? This is usually done with a combination of mechanical and chemical methods which ultimately leave the dissolved oils in the water.
Where is the clean up going to occur? In order to not contaminate the Mississippi river basin, it has to occur at the mouth of the Mississippi. As for marinas along the Gulf Coast, they are already doomed to be fouled by oil no matter what they do.
Where will the inspection take place? In the past, inspections for oil have taken place offshore, prior to entering ports, but the ports were not already contaminated.
Will the oil end up in your sea port? It will if you bring it there or if it drifts there on the currents. Given that 25% of the Gulf of Mexico is already fouled enough to prohibit fishing and therefore much more is actually polluted, it is likely that all Gulf ports will ultimately end up contaminated.
This is already an ecological (and consequently financial) catastrophe of a scale not seen before in the United States. The financial markets absolutely have not yet grasped how bad this actually is and what it means for future "economic growth" in the US. It's also going to be a convenient excuse, 9/11 style, for the economic debacle that is coming anyway. (No, I am not suggesting this is on purpose, just that it comes at a convenient time for the liars and spinmeisters in Washington, DC. And no, I do not wish to debate that point here at all, either about 9/11 or 4/20.)
Oh, and for the absolute mentally ill amongst you, Hitler's birthday was April 20th. Make of that whatever silly connections you choose. I've seen that quoted as "proof" of some "grand scheme" by the Illuminatti (or whatever you choose to call them). Such fervent wishes for someone to be in control is itself part of the proof of the herding behavior of homo sapiens and the tendency of humans to look for patterns where none might actually exist, while simultaneously ignoring meaningful patterns right in front of their noses.
Penn said...
" Few will admit to the possibility that the relief wells fail, everything fails, and the gusher goes unabated for years, the earth's first oil volcano.
What do we have to look forward to in the worst-case scenario? 2-4 billion gallons of oil bubbling up over years, killing off the Gulf of Mexico, much of the Caribbean, the Atlantic, and of course the southern economies.
... Patzek said he wouldn't even ponder the 10 % chance of failure. Too much to think about it. It would be a "disaster heretofore unseen by humanity."
Ok, guys. NO.
This is not a future possibility- and if you ALL with think about it just a BIT, you'll see that.
We ain't going to, don't have to, sit on our butts and "let it all run out."
C'mon, re-engage brains.
Did BP succeed in drilling into the oil formation?
I think we can agree they did. Therefore- another such well could be drilled. And another. And another.
They would take a bit longer than the "relief" wells- but they sure as hell are possible. Punch 6 similar wells into the oil reservoir, around the leak and - harvest the oil.
Ya don't gotta just watch it leak. Not going to happen.
All the rhetoric in this episode is highly interesting to watch, Herdhoppers. You can watch the neurons shutting down, in all directions.
Incidentally, I was exposed to the "herd" concepts long ago. Sophomore year in college, our popular self announced iconoclast anthro teacher walked into the 8 o'clock class (set up that way to decrease the class size) looked us all up and down and over for a good minute, laughed bitterly and said:
"AND, I answer you BACK!!
MOOOOOOOOOOOOOOOOOOO!"
Most of us didn't get it. :-)
"Did BP succeed in drilling into the oil formation?
I think we can agree they did. Therefore- another such well could be drilled. And another. And another."
Yeah, and then we look at what went wrong with this first well, and take it from there....
"They would take a bit longer than the "relief" wells- but they sure as hell are possible."
And so are the screw-ups.
"Punch 6 similar wells into the oil reservoir, around the leak and - harvest the oil. "
Not even BP itself thinks it'll be that easy. The Macondo itself was beyond their abilities, as we now witness, and deeper and/or less straight drilling will be even less certain.
Don't get into that comfort zone too easily. There's a reason for this crew-up, and it's not BP's abundance of skill.
.
Ilargi: ""They would take a bit longer than the "relief" wells- but they sure as hell are possible."
And so are the screw-ups."
Of course. But.
My own, fairly well informed, opinion is that BP's failures here are about 90% due to senile corporate decision making - and really not at all due to technology.
Remember; they drilled the well; and got away with everything, until an apparent gas burp exposed
a) a "blow out preventer" that they had purchased at some yard sale somewhere; which didn't work at all.
b) a blow-out preventer design that ANY 7th grade science fair winner would sneer at as totally incompetent. Not kidding.
c) inferior pipe used, and
d) a corporate decision making process borrowed from the Roman Empire, about 300 years after its collapse.
Seriously; anybody could do better; very very easily. While the 18,000 well was very deep, that same rig has drilled much deeper- to 35,000.
Given the options of "let it run out" or "drill additional wells until we learn how" - the second one seems a good deal more likely.
Fastest way to do it? Put teams from the US, China, Brazil, Venezuela, Mexico, and Canada all at work drilling their own hyperinspected wells, at the same time. Winner gets the oil; drilling stops instantly on any well if any inspector doesn't like it.
Greyzone - do you have links or references about the evacuation up to 500 miles inland?
Greenpa,
1. 5000 feet of water.
2. 30,000 feet of silt, rock, and salt dome.
This results in pressures that even under the best circumstances would take years to reduce pressure to where that field will stop spewing free oil via the wrecked well. In fact, a field of this size usually has 1-3 dozen wells drilled and still produces without gas injection for 9-11 years typically, and that is as fast as they can pull oil out of these fields (because they want to operate the high cost field as short a time as possible).
In short, your idea won't work and violates the physics of the field itself. It will spew until (a) pressure equalizes, which could be years, or (b) a relief well enables successful insertion of a plug into the original failed well.
Consider what happened with the Ixtoc I oil spill. They didn't just drill wells around it to shut it off. It only shut down after a relief well allowed them to close the failed well off, more than 10 months after the blowout, and this was on a well drilled in waters just 50 meters deep, and 11,000 feet of rock. The Deep Horizon disaster is in 5000 feet of water and down through nearly 30,000 feet of silt, calcium carbonite, sandstone, and salt dome.
Ixtoc was admitted to be 10,000-30,000 barrels per day yet covered an area far smaller than this already has. Independent professional estimates have ridiculed the BP estimates of 1000 then 5000 then 14000 barrels per day as all far too low. Those same independent professional estimates have run as low as 25,000 BPD to as high as 95,000 BPD. Only the most recent BP figure is anywhere close to that range.
In short, I don't see how this can end well any time soon. Oh, and I was wrong, it's not at least 6 more weeks, minimum. It's at least 8 more weeks because BP doesn't anticipate finishing the first relief well until August now, so already the timeline is starting to slip.
Greyzone said "The Pentagon is now drawing up "worst case" scenarios that involve the evacuation of the Gulf Coast states in varying degrees including up to 500 miles inland."
Is there a link to this plan? Otherwise, how would someone become aware of this "worst case" scenario, unless someone knew an insider?
This is a LOT of people, and why would they all leave? Even during the worst of hurricanes, many people do not evacuate preferring to remain on their premises and taking their chances.
@ Linda
Not a drought as such Linda, just a serious dearth of substantialrainfall.
@WgS
Good luck, stay safe.
@Greyzone
You know it's been bugging me for a few days that TPTB will scapegaot the oil disaster for the financial outcome already in the pipeline, I know it's ALL such a mess and ergo trivial to feel this way, but I can just hear the voices of those I've been arguing with about the fiscal fiasco saying "oh well it woulda turned out OK if only BP hadn't gone and effed it all up with the calamity they caused in GOM" can't you?
Z
If you hurry you can see the saw doing some cutting at
http://www.deepwaterbp.com/
---
It looks like they are attempting to clean the oil off a swan by using bleach to get it to turn white.
Surprise its a black swan :-)
jal
Will miss your voice, WgS, and will keep a place for you. Here's a song for the road....
Katie Melua & Eva Cassidy - What A Wonderful World
@M
Well if you really want to know I have a degree in mathematics and the house on a 10000 sq ft lot (that we bought in 2003 before it got nuts) is about 40K underwater.
Other than that on a somewhat personal note you're coming across as a jerk. I have to admire Stoneleigh - she never fails to be gracious.
@Greyzone
The Pentagon is now drawing up "worst case" scenarios that involve the evacuation of the Gulf Coast states in varying degrees including up to 500 miles inland.
Do you have a link (or two). I'm preoccupied with other things (surgery on the 7th)... I did check the MSM headlines. Other than Al and Tipper separating and a picture of a couple Thia go-go dancers... I'm not sure what the h*ll I expecting. It's almost surreal.
Coast Guard Adm. Thad Allen has been the sorriest figure in this Punch and Judy all along. Anytime BP tried anything, he was there to cheerlead their plans, while he was supposed to be the no. 1 government man.
BP Criminal Investigation Launched By Feds
Attorney General Eric Holder said Tuesday that federal authorities have opened criminal and civil investigations into the nation's worst oil spill, and BP lost billions in market value when shares dropped in the first trading day since the company failed yet again to plug the gusher.\
Investors presumably realized the best chance to stop the leak was months away and there was no end in sight to the cleanup. As BP settled in for the long-term, Holder announced the criminal probe, though he would not specify the companies or individuals that might be targeted. "We will closely examine the actions of those involved in the spill. If we find evidence of illegal behavior, we will be extremely forceful in our response," Holder said in New Orleans.
With the ambitious "top kill" abandoned over the weekend, BP's hope to stanch the leak lies with two relief wells that won't be finished until at least August. The company is, however, trying another risky temporary fix to contain the oil and siphon it to the surface by sawing through the leaking pipe and putting a cap over the spill.
Coast Guard Adm. Thad Allen, the national incident commander, said Tuesday that BP was making its first major cut with super shears that weigh 46,000 pounds and resemble a giant garden tool. The company will also use a powerful diamond-edged cutter the resembles a deli slicer to try to make a clean cut above the blowout preventer, then will lower a cap over it with a rubber seal.
.
Linda:
You forgot to close the quotation marks in your attempted link - add another " and it should work.
While I can't say why the American masses aren't out protesting, I will say that I agree with Zander and rcg1950: There just ain't no point in street marches and demonstrations.
If it was just about dividing up an existing pie, then protests would make sense, e.g. the civil rights marches, the youth movement in the 60s, gay-rights demonstrations...
But the pie is in the process of splattering. Once the next pie is cobbled together, then organization, demonstrations and, unfortunately, violence, will define how the new pie gets divvied up.
But until then, it's like Greeks protesting and rioting: Absolutely futile. It doesn't matter how much they want to get paid, or to continue to retire at 57; it just ain't gonna happen, period, full stop.
And Greenpa is on to something too.
There's been a lot of talk about nuking the GoM, but is that really necessary?
The containment dome got clogged with gas hydrates, apparently due to the very low temperatures at that depth, BUT, if the relief wells fail, is it really better to try a risky nuclear option rather than to simply spend another billion dollars on engineering a HEATED containment dome?
Yes, it's a huge technical challenge, and possibly it too would fail, but the downside to a heated-dome failure is simply more leakage at the current rate, NOT cracking wide open a three-billion-barrel reservoir of oil, which is the nuke option's downside.
And, if I understand correctly, it's not the oil that's the biggest concern - it's the 30 trillion cf of natural gas that might be released.
To those asking questions, I do not have a link that I can publish at the current time, but I've known these people since I left the military myself 25 years ago. Many a young lieutenant then is now a Colonel or even a general.
I will also note that the Pentagon does "worst case" planning all the time. This does not mean it will occur, just that the Pentagon believes it can occur and therefore should be on the planning table.
I expect that evacuations would be the last thing they would actually contemplate. But I can tell you that the Pentagon has plans for large scale chemical and biological terrorist attacks on specific US cities. Would that surprise you? It shouldn't and neither should planning for the worst case of an ecological catastrophe surprise you.
For example, plans to evacuate Tampa Bay are already publicly discussed. Evacuation plans for other parts of Florida are occurring with public officials even if not yet publicly discussed. Evacuation of Louisiana and Mississippi coastal regions has already been discussed in local newspapers.
So while I am sorry that I cannot give you a current link (and I will not give you a name), the information I have is credible to me on the basis of years of friendships formed under conditions that most civilians would not understand. You are, of course, free to ignore it as you choose.
Matt is of the opinion the BP well head has blown and the spill rate is actually 120,000 BPD...
That would pencil out to about 200 million gallons of oil released since the accident...
If that were the case, wouldn't we be able to see the difference on satellite images between the oil slick resulting from a 50,000 BPD flow rate, and one of 120,000 BPD?
In other words, doesn't the available indirect evidence support, however imprecisely, a lower flow rate than 100,000+ BPD?
I guess we can all relate to a Sci Fi thriller movie?
From Huffpost:
WASHINGTON — "Top kill" didn't stop the Gulf oil spill. How about something "titanic"?
Federal officials are hoping film director James Cameron can help them come up with ideas on how to stop the disastrous oil spill in the Gulf of Mexico.
The "Avatar" and "Titanic" director was among a group of scientists and other experts who met Tuesday with officials from the Environmental Protection Agency and other federal agencies for a brainstorming session on stopping the massive oil leak.
The Canadian-born Cameron is considered an expert on underwater filming and remote vehicle technologies. "Avatar" and "Titanic" are the two highest-grossing films of all time.
Personally, I think they should stick with Kevin Costner and his brother.
Well ... the Canadian interest rates have gone up 0.25%.
Also, The fed and prov. gov. have been quietly raising fees and cutting expenses in a variety of programs. We are already hearing people screaming, "not me, do it to someone else".
I see the "jaws" slowly closing over the next 5 years.
Those who bit off more than they can chew will find themselves finding creative ways to cut their expenses.
Anyone care for powder milk?
Geee, about that wonderful mother-in-law, (cough, cough). Its time to mend fences in case you got to move in with her.
Now, you got to mentally prepare for that daily look that says, "You worthless bum, I knew from the days I set eyes on you that you were no good."
Yes, you will put up with it or hit the road.
Lots of job opportunities around the gulf of mexico.
They might even be hiring immigrants.
A song is running through my mind ... "Changes are coming"
jal
Greyzone: "In short, your idea won't work and violates the physics of the field itself. "
Oh, piffle. :-)
I really didn't intend to provide a complete blueprint of a real world plan.
Extrapolate, please! And consider the political pressure; along with the petrochemical.
16 wells is normal? I'll see your 16, and raise you 250.
It can be done. And in more ways than that, too; but I'm still not that interested in providing blueprints.
What I AM mildly interested in is scowling at the Arthur Dent "So this is it, then, we're all going to die." attitude sneaking in around here.
I ain't. And I don't see any reason to sit and watch the Gulf die, either. Pull your thumbs out of your bums and get back to work.
:-)
" then will lower a cap over it with a rubber seal."
I have this clear vision of the yellow rubber bathtub toy seal, putting the cap in place.
Yup, just what you'd expect.
@Ilargi's link to the poor admiral said...
The operation has never been performed in such deep water, that's the universal qualifier -one size fits all never been tried before when we're pushing the limits of human technology backed up by our out-sized hubris and is similar to an earlier failed attempt that used a larger cap that quickly froze up. BP PLC officials said they were applying lessons learned from the earlier effort, and plan to pump warm water through pipes into the smaller dome to prevent any icing problems. Learning lessons eh? Big business has a penchant for doing that learning lessons thing.
What's the temperature down there? Low 30s? They going to pump warm water 5000 feet down and it's still going to be warm... or one of those mini robots wielding the 23 ton "garden clipper" device come equipped with a water heater making it some multifaceted variation of a Swiss Army knife?
RE: This Country Needs A Few Good Communists
Great article Frank. Thanks for linking to it.
* Deepwater Horizon
- Gusher may be stopped in as little as 900 days
- The press aren't discussing all ramifications
- The gulf recovered from Ixtoc but now fisheries are in decline and there are more people
- It is still seen as politcal theater
- University of Georgia is researching underwater plumes
- The oil companies are the experts, let's leave it to them
- The Plume will enter the Loop and the damage will stretch out over decades
- BP execs should be splashed with oily seawater
- Few will admit the relief wells might fail since that would be a disaster heretofore unseen by humanity
- They will still drill in the Arctic
- BP will cry fiscal uncle and won't remunerate victims
- Pentagon worst case scenario is to evacuate up to 500 miles in land
* Glenn Beck says we are headed toward global governance; In an absolute world, leaders needs absolute power; National sovereignty must be sacrificed to preserve the Euro; A crisis cabinet is needed; Buy gold
* Spring is sad this year; Partisan delusionals are pathetic
* All Wars are failures except the War on the Environment; James Lovelock has backed down from the tipping point; Even Homo Sapiens can't kill all life on the planet though we are giving it the old college try; Enjoy your time one earth
* Daily Obama Amalgam
- It not his fault
- He's been criticized since day one
- If he acts he is condemned, if he does nothing he is damned
- He has verbally taken full responsibility; Isn't that enough?
- He accepted the poisoned chalice when he got elected and will be blamed for the depression
- He was in the wrong place at the wrong time and worked damn hard to get there
- He is not on your team and doesn't have your interest at heart
- He is not really in charge
- He ran on 'change' but hasn't delivered
- His performance has been excrementally runny
- Let's hope he finishes his term and turns the mess over to Sarah since she really would deserve the blame
- He is like Faust
- Villifying him will galvanize the right
* Liberals have sold out and no longer express dissatisfaction; They cling pathetically to the carcass of the Obama presidency
* The Gulf States really could lose 50% of their economies; Maybe the Mayans were right; 2012 could be the tipping point toward human extinction; Have a nice day
* TAEers
- Are educated and economically stable couch potatoes
- Would like to cash out at the apex and view the collapse from France
- Love feeling doomsteadier than thou
- Have too much to lose to protest
* Scream and shout; Go along to get along; Panic calmly
* Will oil stick to the hull of the Obama presidency? If so how do you clean it off? Where is the clean up going to occur? Where will the inspection take place?
I vote for Lady Gaga. Let her plug the leak.
:)
ogardener said...
RE: This Country Needs A Few Good Communists
If you liked Hedges piece, then you’ll like Hope in Common by David Graeber.
So, there are 3,800 wells in the Gulf? How many of those are about this depth? How many in the rest of the world? Who owns them? (Why doesn't Wikipedia appear to know any of this?)
Some of them are going to be run by debt-funded businesses relying on a permanent economic growth paradigm, and some of those businesses are going to go under as demand destruction hits. How expensive is it for a bankrupt company to close down a well cleanly, in a way which will hold for decades?
Some of these companies are going to cut and run. The governments are going to have to get up to speed quickly on how to cap these leaks, unless we believe in a 100% success rate of bankrupt capitalists hanging around to prevent losses to others.
@Caith
Some of these companies are going to cut and run. The governments are going to have to get up to speed quickly on how to cap these leaks, unless we believe in a 100% success rate of bankrupt capitalists hanging around to prevent losses to others.
Good point. Not unlike what we face with hundreds of not-yet-decommissioned nuclear plants that will need very long term looking after.
g
@ veryruffrdahead--thanks for the html tip. I really learn a lot on this site.
here
Success.
Wow, read this new report from Amy Goodman and weep. It is a perfect exclamation point to Ilargi's essay.
In Memory of All That Is Lost.
And someone needs to tell Tony Hayward to STFU. He is a world class asshat.
Hey, hey Top Cat!
The following were NOT, I repeat, NOT a failure. Infact they were highly profitable and lucrative to all those involved in the planning and execution.
The War on Poverty was a failure.
The War on Illiteracy was a failure.
The War on Drugs was a failure.
But it looks like the War on the Environment is a huge success.
The war on poverty perpetuated cheap labour and social hierarchy. Thus providing cheap trinkets and gadgets for rich people the world over!
The war on illiteracy helped the Govt, MSM and corporates to stop the masses from thinking critically and analyzing situations thereby making it easier to manipulate people through propaganda and media distortions.
The war on drugs hugely helped the CIA in their drug running program as well as military weapons sales as well as all sorts of other business - namely crony capitalism and banks.
So all round I'd say, there were good all round profits and incentives to let things fail for the sociopaths in charge.
This is so stupid. Why not fabricate a large C-clamp to crush the 21 inch damaged outflow pipe they are wanting to saw off ??
With either a 6 to 8 inch alectrically actuated screw, or a hydraulic cylinder, the C-clamp can crush the pipe and the flow is pinched off.
Are all of the engineers asleep ??
@ VK
Very good!
Always follow the money. It takes money to wage a war. Suppliers are making a profit.
jal
A taxi driver's gone bonkers with a gun in the UK (lake district) 12 dead many injured.
Z
OK Linda, give me the lowdown in terms a remedial case can understand.
Z
@ Zander--Either Ilargi or Sound of Silence called out this web page for instruction--very easy, if you don't make a typo.
here
Linda
@VK
Point well taken, I stand corrected.
Is the War Against the Environment still safely in the Win Column?
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reb:
Apparently the well head is compromised, so if they just pinch off the pipe, then the full force of the escaping oil & gas will simply blow the breach wide open. Not good.
The well needs to be plugged under the sea floor. That was the point of the attempted "top kill", and of the relief wells.
TAE Summary said...
* All Wars are failures except the War on the Environment
I have always I like your posts.
"I have this clear vision of the yellow rubber bathtub toy seal, putting the cap in place. "
I had an image of a diaphragm being used just a little to late.
Re.: Aid to Gaza
Relief ship operations have had 5 previous deliveries. I didn’t know. No main stream media coverage. I guess everyone was busy with other things. Nobody was paying attention to the plight of those in Gaza. Nobody was paying attention to the terrible way that Israel is treating the people in Gaza.
Suddenly, main stream media coverage is covering the the approaching flotilla.
Suddenly, Israel is interested in doing a commando night time raid.
Just by chance, everyone has their cameras running, (both sides).
At last! main stream media coverage.
Damm!
Those humanitarians are attacking those boarding soldiers with pipes, chairs etc.
Keep the cameras rolling!
Fire some paintballs! Defend yourself! Man overboard!
Shit! This is not going according to script!
Oh!Oh!
There are casualties!
Time to make scrabbled eggs.
Now its time to find something more offensive than slingshots. (Unless Israel was set up)
Everybody is a pirate and boarding and inspecting vessels in international waters. Canada and US have been doing it for years.
jal
I forgot to add
Re.: Aid to Gaza
Main stream media is notified of world wide spontaneous, (cough cough organized) demonstrations against Israel.
jal
New post up.
A president, a gulf, a spill, and debt deflation
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