Surly

Environmentalism May Face Major Setback in 2009

So interesting to read all these posts and see a cross-section of opinion, ignorance, and knowledge!

A couple observations:

Shale oil - Exxon's biggest economic/business mistake was to invest $2 billion in shale oil energy recovery. Ask them about what they think of the technology - remember it is not even close to rocket science and the energy input is roughly equal to energy out. Ultimately this is the measure we need to worry about, not cost.

Subsidies for green vs. carbon-based energy - Artie Fly is the first I've seen to get it close to right. Every since WW II was lost by the axis due to oil availability, oil's strategic import has been obvious to world leaders. The subsidies to the carbon energy economy far outstrip those to green tech - I mean, c'mon - didn't the administration just loan $17.4 bil to the car guys? I didn't notice that the loaned $17 bil to the wind guys... (so many easy examples here, don't get me started). Not to mention the externalities that are absorbed by no one: a defacto subsidy to the carbon energy industry.

Global warming - whatever you may think about the various causes of earth's temps rising, the greenhouse effect is an undeniable phenomenon of atmospheric physics - you coat a planet in a heat reflecting gas and less heat escapes. Whether you think the effect of this is big or small, it is physics - unless you believe in santa claus, you cannot deny the greenhouse effect.

As to various comments about the free market - don't make me laugh. The only thing free about our energy markets is bad information. Control of access to energy is nothing less than life or death for nation-states. Do you really think that those with the power to do otherwise would leave that up to "the market" and leave it to be "free"? Just look how quick we were to abandon free market principles in the face of the breakdown of the credit markets. (note to those who think: did we really have free market principles to abandon?).

Alright L's and G's - what say ye?

Options Trader: Christmas Eve Outlook

Have to concur w Lincolnpark - really nice column Phil. I look forward to reading your well composed columns and derive a lot of good insight into markets, etc from them, not to mention a few laughs as well. Thanks very much for putting them together for us - happy holidays.

Does Anyone Care About Alternative Energy Anymore?

Reading this blog post reminds me of why if you want to understand anything, you really have to avoid the impulse to simplify it. To promote the idea that oil and gas as sources of energy are more "efficient" and "economical" than alternative energy and that alternative energy is "too costly" and can't possibly replace fossil fuels, one must ignore several facts.

The most obvious fact is that America's military expenditure of around $4-500 billion a year is essentially a subsidy to the oil and gas industry. What have we used our military for OTHER than to help secure the strategic resource of oil and gas?

Another fact is that the impact of burning our fossil fuels for energy at the rate we are has wide-reaching effects on climate and thus the environment and the (mostly poor) people that must live in it. The cost of this impact is simply not included in the author's naive calculations.

Yet another is the fanciful notion that alternative energy has enjoyed greater support and funding from the government than the oil and gas industry. Leaving aside the first fact above, the auto industry has enjoyed many subsidies to produce big, gas-guzzling autos, the oil and gas companies have enjoyed tax loopholes for off-shore production, and even the simple fact of state and federal dollars for road construction exists as a de facto subsidy to the entire oil and gas industry.

The author is stuck in a fantasy land that, unfortunately, has guided much planning and big thinking over the last 30 years. Let's hope there's new global leadership that will prepare society to face the energy challenges ahead.

Fannie, Freddie and the 4.5% Mortgage Myth

Your handout is in the form of NOT losing $100,000 on your home equity since you bought it last year. I'd be happy...

The interest deduction is going to be hard to shake - also most of it isn't really an interest deduction, it is an expense deduction (any prop not lived in by the owner is essentially a business).


On Dec 05 01:13 PM CityKitty wrote:

> What about renters? My rent is going up next month. Where's my below
> market handout?
>
> Here's a plan: we get rid of the mortgage interest deduction and
> mortgage rates will go down to 4.5 on their own.

Fannie, Freddie and the 4.5% Mortgage Myth

Author def wrong about the relationship between price and mortgage rate. What does he think fueled the housing boom? Did he just wake up in september?

4.5% mortgages will buttress housing prices and it is a killer idea. Let's just hope that when the dust settles our leadership gets their $#!& together and starts fixing some underlying problems for the 5-10 year term...