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Gregor Macdonald

 
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  • Think the PIGS Are in Trouble? These 7 U.S. States Could Be Heading for Something Worse [View article]
    thecadean "1. States are not allowed to run a deficit. All of California's bond issuance only accounts for 4% of the budget."

    How does your comment on California's debt structure compare with almost any pulblically available data? Answer not well. I will assume you mis-typed, mis-spoke, meant some other state. In short, even debt service is projected to be at 7.00% of revenue in 2011.

    From Bloomberg: "Debt Payments

    Debt payments are forecast to cost $6.2 billion during the 2011 fiscal year, about 7 percent of California’s revenue. The payments are the state’s second-highest obligation under the law after schools, according to the state’s bond documents.

    As for your claim that "All of California's bond issuance only accounts for 4% of the budget." I refer you to Treasurer's Lockyear statement, in which he confirms that total GO debt is zooming towards 100% of the budget: Again, from Bloomberg.

    "California’s credit default swaps, insurance contracts that are generally used to protect against default, have risen 97 percent since late October to $314,000 to protect an investment in $10 million of bonds. The state has $73 billion of general obligation debt outstanding, according to Treasurer Bill Lockyer, who has repeatedly dismissed any suggestion the state may not make required payments."

    In my opinion, given the total collapse of revenues and total collapse of the budget from the peak, CA is on the road to reach the key 90% debt debt level vs revenues. IIRC the budget peaked around 115B and has since collapsed to around 80B? Revenues keep falling of course.

    Hope this helps.

    I could have pulled this data from anywhere. I've been watching it all year.

    Bloomberg: www.bloomberg.com/apps...
    Feb 7 02:23 PM | 3 Likes Like |Link to Comment
  • Oil Production: Post-Peak Mexico [View article]
    I think you'll be surprised how thoroughly the built environment will be unable to respond to peak oil. Market responses to peak oil? Not sure about those. Unless you mean a permanent descent in total wealth.

    Peak oil represents a huge problem to built infrastructure. It's at least a 20 trillion dollar problem that cannot be magically transformed, even from the margin.

    Best,

    G
    Jan 31 06:59 PM | 1 Like Like |Link to Comment
  • Non-OPEC Production Soars in Latest EIA Data [View article]
    This isn't the start of a new trend. This is a rather classical result of multi-month supply falls on a trailing basis, which usually gives producers the option to goose supply for a couple of months. That's pretty well defined pattern now. Lots more to say on this but that's the gist of it.

    G
    Jan 13 12:16 PM | Likes Like |Link to Comment
  • Choice Quotes from the Peak Oil Decade [View article]
    I don't claim that supply is falling. I refer to the fact that supply is falling. Big difference.

    It should be very troubling to anyone with a handle on both macro and energy data that oil is above 80 in the midst of a depression. In 2004, when oil went above 40 for the first time that was regarded as unsustainable, and this is when the economy was pretty strong. Further to the point, during the Schumpeterian Deflationary Boom of the the late 1990's, oil was at 20 bucks or less at the lows as the global economy was cranking. Notice a pattern?

    I recognize that global oil data is confusing and big to most people. That's one of the reasons I blog about the situation, and provide helpful tips, so that people can learn. Come on over sometime and see all these articles in their original form at gregor.us

    Best,

    G
    Jan 7 05:38 PM | 1 Like Like |Link to Comment
  • Case-Shiller Still Predicts Massive 45% Fall from Today’s Values [View article]
    The American house no longer offers the owner an upwardly volatile call option, on robust future wage growth. Peak oil and global wage arbitrage are a big part of the problem.

    Consider this, even without the bubble--the biggest housing bubble in history--there would still be an adjustment owing to our hollowed out manufacturing economy, and poor education trends.

    The US house is no longer something special. But, it remains priced like it's special. If you own anything above 350K you should be prepared that, despite your good schools and nice neighbors, there simply will not be enough economic activity in your local metro area to support the required quantity of buyers, to purchase alot of higher priced homes.

    Not sure why people don't get this but a general rule is as follows: people rarely understand large systems. Their field of vision is more limited to a local view.

    G
    Nov 27 02:00 PM | 5 Likes Like |Link to Comment
  • Energy Watch: Solve for California [View article]
    Thanks for all the comments.

    There's an enormous amount of research that I have done, that sits behind this brief blog post. The annual cost to the state budget and to the state's productivity and air quality caused by the automobile-oriented transport system is gargantuan.

    I very much enjoyed user 353732's social stratification comments.
    seekingalpha.com/artic...

    Indeed, I think it's fair to say that the wealthy elite of CA control alot of the real estate through which rail would run, and, they love to promote green and climate slogans but neither want to have their own cars dislocated, nor think very much about doing the same for the State. In short, they like policies that green-up the power grid as it will affect their lifestyle "less". Or so they perceive. I suspect this is why the Sierra Club is much happier to address emissions of buildings, than California's 33 million vehicles (all vehicles). The Sierra Club does not want to irritate the elite.

    I remain amused the whole EV solution idea. CA is already importing more of its electricity than any other state (as a % of the whole) and it has to use a huge amount of that simply for Water Conveyance and Treatment.

    But look what happens when you try to build a Utility Grade Solar plant in a CA desert. Uhhm, that's not a "Republican" senator that stands in opposition to that.

    Thanks for all the great comments!

    G
    Nov 19 11:02 PM | 4 Likes Like |Link to Comment
  • Asset Reflation Does Not Signal Recovery for U.S.'s Collapsed Economy [View article]
    Thanks so much for all the comments. I have read each one carefully now, and especially appreciate those of you who have augmented, tweaked, and countered some of my views.

    I've taken a few shots this year on my blog, describing how the US got itself to such an awful place. People might want to read my March 24 post The Seigniorage Curse
    gregor.us/oil/the-seig.../

    Best,

    Gregor
    Oct 8 12:02 AM | 3 Likes Like |Link to Comment
  • Oil Supply: As Russian Production Tops Out, World Supply Will Continue to Slip [View article]
    <i>MacDonald seems to be feeding some kind of agenda-driven purpose rather than any connection with reality</i>.

    Thanks Freddy. I was wondering if you could do the audience a favor: since you regard natural gas liquids as oil, you simply go on record as stating "I Freddy Hutter regard natural gas liquids as crude oil, and do so in all my analysis and data." I think this would clarify for people where you are coming from.

    Best,

    G
    Sep 13 05:30 PM | 6 Likes Like |Link to Comment
  • What's the U.S.'s Energy Policy? [View article]
    People still use hoary phrases like "Big Oil"? How quaint. How thoroughly out of date. Really, it's very charming. It's like listening to dinosaurs debating Soviet Communism vs Western Capitalism.

    There is no Big Oil. The western oil companies are now midgets. They are in liquidation. They are irrelevant.

    Gregor
    Sep 11 12:14 PM | 14 Likes Like |Link to Comment
  • What the IEA Doesn't Want You to Know About Peak Oil [View article]
    Extremely well done. I will be mentioning this excellent piece liberally, to my pals. Keep it coming.

    Gregor
    Sep 7 09:00 PM | 4 Likes Like |Link to Comment
  • Perhaps There Are Unseen Green Shoots [View article]
    We may very well come to an of end to this recession-depression, on a short cyclical basis. Possibly for a period time even up to a year. However, there are deep structural, demographic, and energy-supply issues that are totally unique to this juncture in US history that foreclose upon any sustained recovery. It's terrible, and I wish that were not the case. On a 6-12 month basis, I don't wish to argue with ECRI's work. I too see a relief period that would largely be marked by a lower dollar, a boost to agricultural and light manufacturing exports, and some inward investment. However, the twin limitations of interest rates and energy supply (oil) are waiting for us, any time we attempt to emerge from the hole. And that does not even mention the overall crushing nature of the aggregate debt. What you can have therefore is a replay of the January 2007 to July 2008 phase, where exports advance and BRIC is doing well--but US housing, autos, and the FIRE economy (the debt creation economy of finance, insurance, real estate) continues to contract. And when I use the word "contract" I'm being generous. If such a scenario played out, we would crash once again in Summer 2010, in car-crash of higher interest rates, a massacre in commercial real estate, and higher oil prices. Not to mention a potential debacle in government debt, and, the usual policy mistakes from both the FED and the federal government--who are now making mistakes not on a large level but on a scale that is truly awesome.
    Jul 19 11:26 PM | 6 Likes Like |Link to Comment
  • Why I'm Unconvinced by Calls for a Second Stimulus Package [View article]
    It's intriguing, however, that both you and Brad have the same throwaway line in each of your posts: "the economy has done much worse than anybody thought it would."

    That's just not true, and, understandably neither you nor Brad spend anytime pursuing any quantification of the assertion. It's a kind of hanging chad of logic in both of your essays, that appears unimportant at first, but, actually weakens both pieces quite alot.
    Jul 14 12:58 AM | 2 Likes Like |Link to Comment
  • Developing World Consuming More Energy than Developed World. Price, Climate Will Suffer [View article]
    Thanks for all the responses. I'll make two remarks.

    Readers of SA have to realize that these posts are republished from the author's original blog-and--that SA often changes the title. In this light, I can understand why so many comments here understand this post of mine as expressing a support for the thesis of climate change. Actually, that's not the case. I express no view whatsoever. I only refer to it.

    Also, I reject traditional measurements of poverty which have tended to measure wealth in US Dollar terms. I am not alone in this criticism. It's hardly radical or even novel to question measures of poverty in USD terms.

    Thanks to all.
    Jul 14 12:46 AM | 2 Likes Like |Link to Comment
  • California - And by Extension the U.S. - Headed for Permanently Smaller Economy [View article]
    Thankyou for all the remarks. I am quite surprised the assertion of collapse in this article, and in other related articles on my blog, was not rejected more forcefully. In over 125 comments, hardly anyone tried to make the case that the current economic dilemma was similar to other post-war recessions. That's a surprise.
    Jul 14 12:42 AM | 1 Like Like |Link to Comment
  • The Nigerian Delta, Oil Actors and the Global Oil Landscape [View article]
    Thanks for all the responses. I'll make two remarks.

    Readers of SA have to realize that these posts are republished from the author's original blog-and--that SA often changes the title. In this light, I can understand why so many comments here understand this post of mine as expressing a support for the thesis of climate change. Actually, that's not the case. I express no view whatsoever. I only refer to it.

    Also, I reject traditional measurements of poverty which have tended to measure wealth in US Dollar terms. I am not alone in this criticism. It's hardly radical or even novel to question measures of poverty in USD terms.

    Thanks to all.
    Jul 14 12:36 AM | Likes Like |Link to Comment
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