kebu77

Continuing Jobless Claims: Dubious Economic Indicator

Adjusted for population, the current situation TO DATE is less severe than '74 and '82. But this hasn't played out yet...

The Shell Game of State Revenues

"State and local governments spend about $2 trillion a year, and the federal government is now paying about 23% of those costs."

A minor quibble, but $3.5T fed spending, minus 0.5 to the states, equals 3.0 + 2.0 state spending or $5.0T total, or "only" 37% of the $13.5T economy.

Ban enough, but not 40%.

Iraqi Oil: Black Gold or Black Hole?

"The general negative tenor of this article begs for some perspective.... The Average of 18 forecasts of Peak Oil indicates that Peak Oil will be 97-mbd (million barrels per day) in 2030"
- - Freddie Hutter

Yeah, read this - -
www.321energy.com/edit...

Not all forecasts of Peak Oil are equal. . .

Drop in Oil and Gas Prices Masks Production Problems

"Around 61% of this downward revision was due to falling commodity prices; hence, companies attributed nearly 40% of their 2008 revisions to performance."

Some of these companies would have reported downward revisions even if the price had held steady from the end of 2007. The 40% in the quote above would be 100% without the oil price decline - - a result that would then be obvious for all to see.

Performance-based revisions will increase if we are on what some have called "the undulating plateau" that happens as we crest the peak of oil production.

Oil Volatility Will Keep Killing the Economy in Waves

"Oil killing the economy in waves."

A decade or more ago, Colin Campbell, one of the original founders of ASPO, now called ASPO International because of all the individual country ASPOs that have been formed (see "ASPO-USA"), described how economies would experience roller-coaster growth and contraction for a relatively brief period as world oil production began to peak, after which they would experience a long-term contraction that Kunstler now calls "the long emergency".

Wish it weren't so.

Non-Opec Oil Production Has Peaked

Please see, "Non OPEC-12 Oil Production Peaked in 2004" published on The Oil Drum (TOD) on February 23 - -
www.theoildrum.com/nod...

Many of the comments following this post are as illuminating as the post itself.

Two other recent TOD posts fill in some of the rest of the story - -

"Analysis of Decline Rates"
www.theoildrum.com/nod...

"Saudi Arabia's Crude Oil Production Peaked in 2005"
www.theoildrum.com/nod...

De-fetishising GDP Data

Below is a quote from Bobby Kennedy on what the Gross National Product means and more importantly what it does not mean. He would have a made a fine economist...

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

Robert F. Kennedy Address, University of Kansas, Lawrence, Kansas, March 18, 1968

The Peaknik Diaspora

p.s.: for a detailed discussion of ELM, please see - -
graphoilogy.blogspot.c...

and, specifically for Russia, please see - -
seekingalpha.com/artic...

The Peaknik Diaspora

"I generally avoid the peak-oil crowd, not because they make no sense at all but rather because they're so shrill."

Felix, these are not your own words, but you adopt them by quoting them. The folks in the PO crowd (peak oil, not pissed off) are far too disparate to be lumped into one simple category.

Colin Campbell is more droll that shrill. ASPO-USA is more business-like. Investment baknker Matthew Simmons focuses on the huge capital costs of maintaining production levels in the face of rising depletion rates in existing fields. Community Solution, like its name, addresses communities and their relation to their local environment. The Oil Drum and The Energy Bulletin simply chronicle the ongoing reports and views of the media and opinion makers on energy, climate, environmental, and sustainability issues with the perspective that world oil production will soon peak, just like the USA, Indonesia, the North Sea, Mexico, etc., already have.

One of the most "not-shrill" PO spokesmen on The Oil Drum is Jeffrey Brown ("westexas") who articulates an approach to understanding the potentially serious impact of PO on the USA and other oil importing countries that he calls "The Export Land Model" (ELM). According to the ELM, once an oil exporting country hits peak production, its exports will fall faster that its production in the ensuing years (as it continues to increase its internal oil consumption). It is scary how closely Mexico's current experience has fit the ELM since it went into decline.

The global recession may postpone the onset of PO by a bit, but the resulting oil price decline has also caused investments to be postponed. Lower demand now and lower supply later means we end up in the same place...

Traffic Volume Continues to Decrease in October

Using a 12-month moving average eliminates seasonal variations, but understates the rate of change.

You have to go back six years to Oct 2002 to see a lower VMT figure than 10/08. That's a big change and only partially recession-related - - the first break in the upward trend occurred about the time oil started its upward price trend and the initial jobless phase of the recovery ended in mid-2003, after the 2001 recession.

Just a Recession, Like All the Previous Ones

"So, it looks like the discrepancy in how different age groups are being affected by the current recession is likely more a function of what part of the business cycle we're passing through than anything unique to our era."

However, as you went beyond Norris' snapshot analysis, consider that the truth could be both the business cycle and "our era" as the analysis is expanded from one generation to two - -

If the post-1987 data shows a cyclical pattern trending towards less employment of young adults (somewhat contributed to by the older boomers in their peak earnings years being able to shelter their post-teen children into their late 20s), how does this compare to "our parents era" when young boomers married younger, formed households sooner, and fully participated in the labor market (esp. thru the two major post-WWII recessions and serial energy crises)?

If this recession hangs on into 2010 or later with a jobless recovery, we could see far more competition for jobs across the age range. It may be understating it to say that there may be substantial social and political consequences.

Natural Gas Transportation Is a Win-Win Technology

A dissenting view - -

mcauleysworld.wordpres.../

"Pickens’ Natural-Gas Nonsense"
Friday, September 12, 2008
By Steven Milloy

Mortgage Modifications Don't Necessarily Offer Relief

Arnold Country, you are correct.

Servicers make more money on dragging things out and going to foreclosure that they do on loan mods. Their "prosperity" business model doesn't contemplate default rates that do real harm to investers. Their call center fire-walls block meaningful discussions with loss-mitigation staff, etc.

I was 3 payments late on my 7%ARM (sched. to reset in a yr. at 10%), due to a local housing depression that almost destroyed my business, when my uncle proposed a loan mod to the servicer - -

- - With his 805 FICO, he would co-sign
- - Change to fixed 15-yr 6.5% to accelerate principal reduction
- - Principal bal. lowered to 87% of current bal.
- - $10,000 cash bal.-reduction payment to deal with cash-flow issues and fact that the proposed lowered principal bal. was still $10k under water

In my ignorance at the time, I didn't realize how inflexible the servicer's arrangement with the investors apparently was. We offered to replace a subprime mtge with a prime one in a market where house prices were dropping $10,000 a month, a deal clearly in the interest of the investors.

14 mos. after refusing our offer (w/o even a counter), they now have accepted a deed-in-lieu w/ full debt forgiveness, and investors will lose multiples of the discount we were proposing, well over $100k after selling expenses.

A servicer-lender system that worked in prosperous times has failed. The structural barriers to meeting the common interests of borrowers and lenders/investors will require legislation, including allowing bankruptcy judges to modify loans on principal residences, as a counter-weight to the barriers.

The Pickens Plan Changes Its Strategy

Picken's plan and most other energy proposals deal with expanding supply of alternative fuels (batteries, CNG/LNG, LPG, H2, etc.) to accommodate decreasing supply of oil-based fuels. No one seriously addresses "negawatts" and other demand-side solutions to the energy crisis.

Not good enough.

We need to save energy in a hurry due to general oil depletion issues and for national security. The single largest energy efficiency / conservation option (with the possible exception of improving the energy efficiency of buildings) is to expand and electrify the freight railroads. (Passenger can follow, but freight now is critical.)

Diesel-electric rail transport is 10X more efficient that big rigs, not counting the savings on road maintenance and public safety from getting the big rigs off the road - - and electrified rail is double that. Rail saves so much energy that using coal-fired electricity to run trains reduces CO2 emissions compared to NG-powered trucks (gasoline and diesel are not even in the running).

Between the Civil War and 1905, America expanded the rail network from about 30,000 miles to 240,000 miles. The current network is a little over half that, due the the transition to trucking that came when we switched from a coal to an oil economy, and the largest use of rail is transport of bulk commodities (e.g., coal mine to power plant).

An added effort should be made to expand water transport of goods, incl. river/canal/coastal traffic and more shipping of Asian goods to Gulf and E. Coast ports via Panama Canal vs. Trucking from W. Coast Ports.

The diesel saved can go in part to ensuring that shortages of home heating fuel do not occur during the transition of building heating to geothermal heat pumps and other non-oil heating sources.

The International Energy Agency is finally coming around to the reality that an energy crunch is upon us with the end of cheap oil. (Even now, oil is not cheap @ 4X its 1998 low and 3X its 2002 low.)

This July The Oil Drum, theoildrum.com, published a detailed proposal by Alan Drake, a proponent of expanded and electrified rail, which can be found at www.theoildrum.com/nod.... Mr. Drake's dedication to the national interest come thru in every word.

The expanded rail network in the 19th century converted the US into a truly national ecomony by the end of the century. The relative impact of that effort was greater than the construction of the interstate highway system. (An anecdote tells the tale: the 1906 SF earthquake was about as devistating as Hurricane Katrina was on NOLA, but a much smaller country was able to provide what some have commented was more effective and timely relief from all over the country via rail.)

A government effort to support and guide the reconstruction of our freight rail system is needed now.

The Deflation Debate: Why This Time Is Different

Does all the money held by the top dogs in the oil-producing countries change any of the views expressed above?

What happens when the Treasury (soon) goes into the bond market in a big way, if there are shortage of buyers?

If rates on long issues then rise substantially to attract the extra cash needed? If the dollar then drops fast and oil and other commodities rise fast... just after OPEC has (on or before their Dec meeting) cut quotas again, triggering an unintended second oil price spike?