Saturday, April 23, 2005
Four season, one week
Tuesday was a cool summer day, the ones you live for. 29 C, hot enough to enjoy but not so hot that you can't be active, just gorgeous.
Wednesday was a spring rainstorm, warm refreshing rain coming down by the bucketful.
Friday was a clear crisp autumn day. The sun was shining but the air was cold enough for a jacket even when you were active.
Today, Saturday, is a bloody blizzard the ground is white and the trees are caked in wet snow.
Please can we have srping for more than a day. It would be really nice to have the season we are supposed to have for at least five minutes.
A revolution in cabbagetown
In a backyard in a downtown Toronto neighbourhood orthodoxy was challenged.
Follow-up: There was a similar event in New York a month ago. There are stories and commentary about this event here and here.
"This is a landmark event because it crosses yet another threshold of conservatism," said Tarek Fatah, co-founder of the Muslim Canadian Congress and whose small yard was the venue for the Juma Prayer led by Ms. Raza. "It sets an agenda where you can't go back from here."
Back for Mr. Fatah and others is to the belief among many traditional Muslims that women-led prayers are heretical and un-Islamic. Indeed, it was fear of confrontations that caused the traditional Friday afternoon prayer to be moved twice -- from the Noor Cultural Centre and from a commercial building in downtown Toronto, after a New York-based Urdu-language newspaper published the leaked secret location -- before landing in Mr. Fatah's yard. The prayer had also been condemned as anti-Islamic.
In her manner of dress, Ms. Raza did not stray from tradition: The black shawl with red embroidery that covered her head also covered her traditional dress of long tunic and pants, resembling a burqa. One of the many reasons for segregation of men and women in prayers is the potential distraction of a woman's sexuality.
Before addressing the gathering, Ms. Raza -- who has led many inter-faith prayers at churches, temples and synagogues -- went over the passages she had marked in the Koran she was clutching.
"I am in awe, and I have this responsibility. I don't want to mispronounce anything," she said. "This is such a significant day. Firstly, because it's actually the day of the Prophet's birthday. And it's the Juma Prayer, a significant weekly ritual for Muslims. And I have been asked to lead the prayer.''
Starting with a zikr (chanting of a verse), Ms. Raza stood to read her khutba (sermon). The Juma Prayer went off without a hitch.
"It's a very humbling experience to be asked by my own community to lead them," she said. "This is my submission to God. This is not for people, it's not for the media. It's not that I want to take over the duties of male imams.
"In terms of a movement, I call it a silent revolution. Other women will hear about it and feel empowered. It's not being equal to men. Because men can't be equal to women. But it's about being equal in spirituality."
Mr. Fatah, whose MCC organized the prayer, added: "There's a sense of solidarity with women who do feel they need to be in leadership positions, with all respect to those who don't wish to be. There are many ways of expressing Islam. And I think this is the way the Prophet would have appreciated it, had he been alive today."
Among those at the prayer was Asra Nomani, a former Wall Street Journal reporter-turned-author based in Morgantown, W. Va. She was in Toronto for the fifth stop on the Muslim Women's Freedom Tour she launched on March 1 to visit North American cities, promulgating the message of women's rightful place alongside men in Islam.
The first stop had been New York. On March 18, a mixed-gender Friday congregational prayer was led by Amina Wadud, a female Islamic studies professor at Virginia Commonwealth University. The prayer made news around the world, and the protests, as well as support, extended from the pavement outside Synod House at the Cathedral of St. John in New York to Malaysia and Egypt.
On Thursday night, hours before attending the prayer led by Ms. Raza, Ms. Nomani read from her book, Standing Alone in Mecca, for an audience at the Noor Cultural Centre. While on a pilgrimage to Mecca, she said, she was inspired by the throngs of men and women praying side by side. She spoke about losing her religion and reclaiming it from the strictures of patriarchy.
"After yesterday's prayer, Ms. Raza and Ms. Nomani hugged. The gilt of the Arabic calligraphy on Ms. Raza's Koran glinted in the sun.
"We did it," Ms. Nomani said. "It was so simple. Just a few people and a woman willing to lead them. But it was so profound." (Link)
Rich pay more
There are two explanations for this story, which happen to be both true: The tax rate for lower incomes could have gone down (which it did) and the proportion of the nation's wealth that is in the hands of the wealth could have gone up (which it did). It also explains with high income individuals are important for tax purposes.
Anybody got some ideas?
Canada's top earners paid a greater share of the federal income tax pie in 2002 than 1990, Statistics Canada said Friday.
The government agency found that the 10 per cent of Canadian tax filers in the highest income bracket paid 52.6 per cent of the total federal personal income tax in 2002, up from 46 per cent in 1990.
Statistics Canada conducted the study by dividing tax filers into three groups: the 10 per cent with the highest incomes, the 50 per cent with the lowest incomes, and the remaining 40 per cent who are called intermediate-income earners.
Statscan attributed the increase among high earners to “a smaller drop in the effective tax rate than that of the other two groups of tax filers, combined with an increase in their share of total income.”
At the other end of the spectrum, the half of tax filers with the lowest incomes saw their share of the tax load fall in the same period. In 2002, they accounted for 4.4 per cent of personal income tax paid, down from 6.7 per cent twelve years earlier — despite having higher incomes.
Intermediate-income earners were the biggest winners in terms of effective tax rate, Statscan said.
The report also found that Canadians' total income grew faster than their federal personal income tax bill in the period. While federal tax increased 49.4 per cent, total income rose 63.8 per cent. Statscan attributed the gap to two years, 2001 and 2002, when total income continued to rise while federal tax revenue went down.
Overall, Canadians saw their effective federal tax rate, or the federal tax paid for each $100 of income, decline. In 2002, Canadians paid on average $11.18 of federal tax for each $100 of income. In 1990, they paid $12.25 for every $100, a decline of $1.07. (Link)
"Infomania" lowers IQ
Workers distracted by email and phone calls suffer a fall in IQ more than twice that found in marijuana smokers, new research has claimed.
The study for computing firm Hewlett Packard warned of a rise in "infomania", with people becoming addicted to email and text messages.
Researchers found 62% of people checked work messages at home or on holiday.
The firm said new technology can help productivity, but users must learn to switch computers and phones off.
The study, carried out at the Institute of Psychiatry, found excessive use of technology reduced workers' intelligence.
Those distracted by incoming email and phone calls saw a 10-point fall in their IQ - more than twice that found in studies of the impact of smoking marijuana, said researchers.
More than half of the 1,100 respondents said they always responded to an email "immediately" or as soon as possible, with 21% admitting they would interrupt a meeting to do so.
The University of London psychologist who carried out the study, Dr Glenn Wilson, told the Daily Mail that unchecked infomania could reduce workers' mental sharpness.
Those who are constantly breaking away from tasks to react to email or text messages suffer similar effects on the mind as losing a night's sleep, he said. (Link)
The spending plan that President Bush submitted to Congress this year contains 2,000 pages that outline funding to safeguard the environment, protect workers from injury and death, crack down on securities fraud and ensure the safety of prescription drugs. But almost unnoticed in the budget, tucked away in a single paragraph, is a provision that could make every one of those protections a thing of the past. The proposal, spelled out in three short sentences, would give the president the power to appoint an eight-member panel called the "Sunset Commission," which would systematically review federal programs every ten years and decide whether they should be eliminated. Any programs that are not "producing results," in the eyes of the commission, would "automatically terminate unless the Congress took action to continue them.". . .
In practice, the commission would enable the Bush administration to achieve what Ronald Reagan only dreamed of: the end of government regulation as we know it. With a simple vote of five commissioners -- many of them likely to be lobbyists and executives from major corporations currently subject to federal oversight -- the president could terminate any program or agency he dislikes. No more Environmental Protection Agency. No more Food and Drug Administration. No more Securities and Exchange Commission. (Link)
Friday, April 22, 2005
Mr Dithers Throws the Dice
Harper will have a big stick to Martin with, but he will have armed Layton to attack him. Charges of jumping the gun are useless from the Liberals, but will be very statemen-like from the NDP. The tories would be making a power-grab and Layton just has to call a spade a spade for the NDP to walk into a lot of Liberal turf.
This is also a opportunity for the Greens. The Greens are more moderate then the NDP, but Canadians have not really discovered this yet. They are kind of the liberals with more vision, which should sell well if the product can build some name recognition. The greens have a lot more money this time then last time because of the new election finance rules. The question is whether they can grab both the social moderate vote and the green tory vote. It is possible but difficult
Jack Layton made be learning to lead.
This story is from POGGE. Seems to be a representative discussion of Paul Martin's Hail Mary pass.
I watched Dithers' address to the nation this evening on CPAC, which also broadcast the followup remarks by each of the opposition leaders.
I thought Martin's remarks were pretty much predictable. When the CPAC commentator, whose name escapes me, said he thought that the PM's commitment to call an election within thirty days of the final Gomery report was "brilliant politics", I found myself shaking my head. A few weeks ago that move might have been smart. Now it looks weak. It would never have been brilliant.
Harper's remarks, too, were predictable. He really wants to go now but obviously felt he had say that he would wait and see what "the Canadian people say." In other words he's going to watch the polls and see what the reaction to Dithers' speech is.
Duceppe removed any doubt for me about his intentions. He's rarin' to go. So if Martin's move tonight doesn't pay off, we'll be going to the polls sooner rather than later.
While Layton was speaking I noticed two things. When he spent a fair amount of time talking about what the government should be paying attention to instead of being consumed by scandal, I agreed with him. And he seems to have that big, toothy grin under control. He looked like a leader of a political party. That's not to say that I immediately decided "he won", just that I personally appreciated his performance in a way that surprised me just a bit.
I spent a little time wandering around the blogosphere this evening and came across a few other reactions. From CalgaryGrit:
Analysis of Jack: In all seriousness, he was the best of the bunch. Actually talked about the issues and making Parliament work. The NDP base soaks up stuff like that. The commentators spent as much time talking about Layton’s offer to modify the budget as they did about Martin’s offer to call an election in January. This NDP ploy could backfire, but I really like the way Layton is approaching this.
I've seen a number of people express surprise, even incredulity, at the idea that Layton is still offering to work with the Liberals, but as he himself pointed out in his speech that's the role the NDP has historically played: that of a minority party taking any opportunity to work on behalf of the issues in which it believes. Right now, I think a lot of voters might just respond to that. At least a lot of the voters who are even remotely likely to vote for the NDP.
From Darren Barefoot writing at the E-Group:
I'm not crazy about Layton's party, but he's by far the best speaker, and is far succinct that his fellow speakers. It's also the best-written speech, pointed without being catty. He wins my respect by not focusing on the scandal, but on what government should be doing instead of the scandal.
And from Paul Wells:
Big, big win for Layton, within the limited ambit of his reasonably expectable electoral market: He begins by talking about what government should be doing. Among other things, it's a refreshing change from the previous three guys. If anyone's still listening...
Notice something here? They're all talking about Jack Layton on an equal footing with Martin, Harper and Duceppe in the midst of a scandal that involves Liberal corruption, the possible fall of a government and national unity issues. That in itself is a victory. The fact that they all say nice things is gravy. Who'd a thunk it? (Link)
We interrupt your regularly scheduled scandal...
...for an entirely different scandal.
With people entire focused on Adscam and the Gomery commission, people have missed the bloodly evidence of government acquiensense of the torture of Maher Arar. Go to this link for details.
Thursday, April 21, 2005
The Great American Housing Bubble begins to burst
The U.S. is facing a massive econmic decline, much like Japan did when its property price bubble burst in the late eighties. Combine this with high oil prices, a stubborn guerrila war, and a meglomanical president who's corrpution is unprecedented in recent time, then the future looks a bit grim.
The southern California housing crisis, of course, has a sunnier side as well. In the past five years median home values have increased 118% in Los Angeles and an extraordinary 137% in neighboring San Diego. Homes, as a result, have become private automated teller machines (ATMs), providing their owners with magical, unearned cash flows for purchasing new sports utility vehicles, making down payments on vacation homes, and financing increasingly expensive college educations for their kids. Second mortgages and home refinancings, according to a Wharton Business School survey, have generated an astounding US$1.6 trillion in additional consumption since 2000.
The great American housing bubble, like its obese counterparts in the United Kingdom, Ireland, the Netherlands, Spain and Australia, is a classical zero-sum game. Without generating an atom of new wealth, land inflation ruthlessly redistributes wealth from asset-seekers to asset-holders, reinforcing divisions within as well as between social classes. A young schoolteacher in San Diego who rents an apartment, for example, now faces an annual housing cost ($24,000 for a two-bedroom in a central area) equivalent to two-thirds of her income. Conversely, an older school-bus driver who owns a modest home in the same neighborhood may have "earned" almost as much from housing inflation as from his unionized job.
The current US housing bubble is the bastard offspring of the stock-market bubble of the mid-1990s. Housing prices, especially on the west coast and in the east's Bos-Wash (Boston-Washington, DC) corridor, began to rocket in the second half of 1995 as dot-com profits were plowed into real estate. The boom has been sustained by sensationally low mortgage rates, thanks principally to the willingness of China to buy vast amounts of US Treasury bonds despite their low or negative yields. Beijing has been willing to subsidize US mortgage borrowers as the price for keeping the door open to Chinese exports.
Similarly, the hottest home markets - southern California, Las Vegas, New York, Miami, and Washington, DC - have attracted voracious ant columns of pure speculators, buying and selling homes in the gamble that prices will continue to rise. The most successful speculator, of course, has been George W Bush. Rising home values have propped up a stagnant economy and blunted criticisms of otherwise disastrous economic policies. The Democrats for their part have failed to address seriously the crisis of millions of families now locked out of home ownership. In a bubble city such as San Diego, for instance, less than 15% of the population earns enough to finance the cost of a median-value new home.
The bubble has already burst in San Francisco, and the April 11 issue of Business Week headlined fears that a general deflation - perhaps of international magnitude - is nigh. What will life be like in the United States (or Britain or Ireland) after the home-equity ATM shuts down?
The business press, as always, reassures passengers that they are headed for a "soft landing", a slowdown rather than a crash, but even a mild jolt may be sufficient to end the current anemic recovery and throw all the dollar-pegged economies into recession. More ominously, some eminently respectable Wall Street economists, like Stephen Roach of Morgan Stanley, have been warning of a dangerous negative-feedback loop between the foreign-subsidized housing bubble and the huge US trade and budget deficits. "The funding of America," he has written, "is an accident waiting to happen."
At the end of the day, US military hegemony is no longer underwritten by an equivalent global economic supremacy. The housing bubble, like the dot-com boom before it, has temporarily masked a mess of economic contradictions. As a result, the second term of George W Bush may hold some first-class Shakespearean surprises. (Link)
The lowly fridge saves the Earth
I makes sense to target conservation projects on were it is easiest to gain ground. For household energy use the fridge has been, and continues to be one of the largest energy consumers in the typical home.
Take the lowly refrigerator. After the oil shocks of the 1970s, the federal government mandated higher efficiency standards for refrigerators that, alone, have made it unnecessary to build hundreds of power plants, energy experts say. Today's models use only about a third of the power consumed by models 30 years ago.
I love the historical note
Last week, the government announced steps that may boost refrigerator efficiency another 30 percent beginning in 2011 - saving consumers $10 billion in electricity and cutting energy requirements by the equivalent of more than 230 power plants.
But consumers don't have to wait. Larry Schussler's company in Arcata, Calif., sells the Sun Frost RF-12, which uses just 171 kilowatt hours of power a year, 51 percent better than today's federal standard. There's a downside though. Sun Frost doesn't have an icemaker, holds only about 10 cubic feet of groceries, and costs about $2,400. "We're not making much of a dent in the overall market yet," Mr. Schussler concedes. "They sell 8 million fridges in the US and we're just tiny fraction - less than 1 percent of that. But we're leading the way."
The company ships the machines worldwide, especially to places that have no power grid. They're so efficient they can run using just a modest solar array. And Sun Frost expects them to last well over 20 years.
For those who don't want to sacrifice space or an icemaker, Frigidaire's FRT21FR7E has 20 cubic feet of space and is still 28 percent more efficient than federal standards, tops among comparably equipped refrigerators. Suggested price: $799. (More Gadgets)
Activism and Wall Street: A Marriage?
PS just another sign of the rising power of the Megacorps.
For the past 35 years, Common Cause has lobbied Congress on everything from open- meetings laws to campaign-finance reform. But facing stiff resistance to its issues in Washington these days, the good-government group is opening a second front in its push for reform: Wall Street.
Yes, activists are using capitalism to make the world a better place. Surprisingly, they're making headway.
By forging a political coalition with shareholders at the nation's 30 largest mutual funds, Common Cause aims to pressure corporations to reveal which political campaigns they have supported. Its hope: Outraged shareholders will force more scrutiny and demand change. It's a strategy that activists of various stripes are using. If a Republican Congress and administration prefer free markets to regulation, the thinking goes, then use marketplace dynamics to raise standards. Wall Street is listening. "There has been ... a growing awareness of what organized money can do in terms of effecting change in corporate behavior," says Susannah Goodman, senior project director at Common Cause. "It's a great tool, and we'll see it growing. It's already growing." For instance: Under pressure from shareholders, pharmaceutical giants Schering-Plough and Johnson & Johnson this year joined Morgan Stanley in reporting what they contribute to political action committees. At shareholder meetings this spring, another 41 companies will consider following suit. Though marketplace activism isn't new, the shifting focus of regulation-minded groups is. Even those in tune with Washington's political majority sometimes find that they get more bang for their buck by contacting executives instead of representatives. Consider the Mississippi-based American Family Association (AFA), a socially conservative force with 2.2 million members. Every week for the past year, the group has e-mailed its members prewritten letters, urging them to send the letters to various corporate executives. The missives often urge a firm to stop advertising on risqué TV shows. A number of companies have pulled their ads, says special- projects director Randy Sharp. "We've been very successful" - more so than in lobbying the Federal Communications Commission. "It's been a lack of law enforcement at the FCC that's to blame, so the only alternative is grass-roots lobbying of these executives." Still, the private sector is where social activists see an opportunity. The Investor Responsibility Research Center says shareholders are bringing 348 resolutions on social issues, about the same number as last year, to annual meetings this spring. Leading the way with 65 resolutions are environmental issues, where activists see corporate America moving in a more hopeful direction than regulatory Washington. Over the past 18 months, for instance, institutional investors and environmentalists have argued that any role companies might have in global warming could make them a target for future lawsuits or tough regulations. Some seem to be listening. Three power companies - Cinergy Corp., American Electric Power, and TXU Energy - have analyzed their risks relative to climate change. Southern Co. and Ford Motor Co. have agreed to do the same. "We have gotten enormous traction with business and investors, not because it's a clever tactic, but because the economic risks are inordinate," says Mindy Lubber, president of CERES, a coalition of environmental, public interest, and investor groups. Encouraged by progress in framing climate change as a threat to companies' bottom lines, advocates are bringing some new issues before shareholders this season. Those who own stock in Exxon Mobil or ChevronTexaco, for instance, will vote on whether to call on management to report on the likely environmental impact of drilling in Alaska's Arctic National Wildlife Refuge. A leading lobby group to preserve the ban, US Public Interest Research Group (US PIRG), now dedicates half its resources on the issue toward lobbying companies instead of Congress. Some of its methods are unorthodox, such as recruiting anthropologists to write British Petroleum President John Browne, urging him to consider the Gwich'in tribe that lives in the region. Whatever the impetus, BP said a year ago it has no plans to drill in the refuge. On another issue, US PIRG has been calling on Congress since 2001 to require stricter storage standards at chemical plants where, it says, a terrorist attack in some instances could kill 1 million or more people. Yet because Congress has declined to impose such regulations, the group over the coming year will team up with a network of investors for the first time to help nudge management. "We've been fighting defensively ever since [President] Bush came to office, but the corporate arena allows us to be more proactive," says Athan Manuel of US PIRG's Alaskan wilderness campaign. Not every activist group gets a welcome reception at corporate meetings, Mr. Manuel says. Those with no credentials for doing levelheaded policy analysis seldom get a hearing. What's more, some organizations that often do get a hearing say their membership is sometimes wary. "There are many in the environmental community who do worry about our involvement with the corporate sector," says Kevin Knobloch of the Union of Concerned Scientists. "They worry about us compromising our values." But activists agree that if they can make a solid case for a policy proposal that makes business sense, executives are often willing to listen. On this score, Friedrich says PETA persuaded McDonald's to adopt a more humane slaughtering method at a cost of $1 million per slaughter line by showing the investment would pay off economically: fewer worker-compensation claims, higher carcass quality, and a higher meat yield. Similarly, US PIRG believes it can help oil companies tune in to American consumers who don't want oil drilling in the Alaskan refuge. "Maybe the greatest irony is that environmental groups are engaged with corporations where we could help their bottom line," Manuel says. Some 15 years ago, "no one ever would have thought US PIRG would be helping BP bolster its image as a green company. But if they earn it, we're happy to compliment them for it." (Link)
By forging a political coalition with shareholders at the nation's 30 largest mutual funds, Common Cause aims to pressure corporations to reveal which political campaigns they have supported. Its hope: Outraged shareholders will force more scrutiny and demand change.
It's a strategy that activists of various stripes are using. If a Republican Congress and administration prefer free markets to regulation, the thinking goes, then use marketplace dynamics to raise standards. Wall Street is listening.
"There has been ... a growing awareness of what organized money can do in terms of effecting change in corporate behavior," says Susannah Goodman, senior project director at Common Cause. "It's a great tool, and we'll see it growing. It's already growing."
For instance: Under pressure from shareholders, pharmaceutical giants Schering-Plough and Johnson & Johnson this year joined Morgan Stanley in reporting what they contribute to political action committees. At shareholder meetings this spring, another 41 companies will consider following suit.
Though marketplace activism isn't new, the shifting focus of regulation-minded groups is. Even those in tune with Washington's political majority sometimes find that they get more bang for their buck by contacting executives instead of representatives.
Consider the Mississippi-based American Family Association (AFA), a socially conservative force with 2.2 million members. Every week for the past year, the group has e-mailed its members prewritten letters, urging them to send the letters to various corporate executives. The missives often urge a firm to stop advertising on risqué TV shows.
A number of companies have pulled their ads, says special- projects director Randy Sharp. "We've been very successful" - more so than in lobbying the Federal Communications Commission. "It's been a lack of law enforcement at the FCC that's to blame, so the only alternative is grass-roots lobbying of these executives."
Still, the private sector is where social activists see an opportunity. The Investor Responsibility Research Center says shareholders are bringing 348 resolutions on social issues, about the same number as last year, to annual meetings this spring. Leading the way with 65 resolutions are environmental issues, where activists see corporate America moving in a more hopeful direction than regulatory Washington.
Over the past 18 months, for instance, institutional investors and environmentalists have argued that any role companies might have in global warming could make them a target for future lawsuits or tough regulations. Some seem to be listening. Three power companies - Cinergy Corp., American Electric Power, and TXU Energy - have analyzed their risks relative to climate change. Southern Co. and Ford Motor Co. have agreed to do the same.
"We have gotten enormous traction with business and investors, not because it's a clever tactic, but because the economic risks are inordinate," says Mindy Lubber, president of CERES, a coalition of environmental, public interest, and investor groups.
Encouraged by progress in framing climate change as a threat to companies' bottom lines, advocates are bringing some new issues before shareholders this season. Those who own stock in Exxon Mobil or ChevronTexaco, for instance, will vote on whether to call on management to report on the likely environmental impact of drilling in Alaska's Arctic National Wildlife Refuge. A leading lobby group to preserve the ban, US Public Interest Research Group (US PIRG), now dedicates half its resources on the issue toward lobbying companies instead of Congress.
Some of its methods are unorthodox, such as recruiting anthropologists to write British Petroleum President John Browne, urging him to consider the Gwich'in tribe that lives in the region. Whatever the impetus, BP said a year ago it has no plans to drill in the refuge. On another issue, US PIRG has been calling on Congress since 2001 to require stricter storage standards at chemical plants where, it says, a terrorist attack in some instances could kill 1 million or more people. Yet because Congress has declined to impose such regulations, the group over the coming year will team up with a network of investors for the first time to help nudge management.
"We've been fighting defensively ever since [President] Bush came to office, but the corporate arena allows us to be more proactive," says Athan Manuel of US PIRG's Alaskan wilderness campaign.
Not every activist group gets a welcome reception at corporate meetings, Mr. Manuel says. Those with no credentials for doing levelheaded policy analysis seldom get a hearing. What's more, some organizations that often do get a hearing say their membership is sometimes wary.
"There are many in the environmental community who do worry about our involvement with the corporate sector," says Kevin Knobloch of the Union of Concerned Scientists. "They worry about us compromising our values."
But activists agree that if they can make a solid case for a policy proposal that makes business sense, executives are often willing to listen. On this score, Friedrich says PETA persuaded McDonald's to adopt a more humane slaughtering method at a cost of $1 million per slaughter line by showing the investment would pay off economically: fewer worker-compensation claims, higher carcass quality, and a higher meat yield.
Similarly, US PIRG believes it can help oil companies tune in to American consumers who don't want oil drilling in the Alaskan refuge. "Maybe the greatest irony is that environmental groups are engaged with corporations where we could help their bottom line," Manuel says. Some 15 years ago, "no one ever would have thought US PIRG would be helping BP bolster its image as a green company. But if they earn it, we're happy to compliment them for it." (Link)
Inside the conclave
Behind the sealed doors of the Sistine Chapel, the cardinals of the Roman Catholic Church burst into applause Tuesday afternoon when, after four rounds of voting, Cardinal Joseph Ratzinger received more than the 77 votes needed to become pope.
Wednesday, April 20, 2005
More Peak Oil -- Less Paranoia -- Just as much fear
"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year,"
There article is clear and focused, unlike the other article on this topic I have also posted. Both are long but this one is particularly worth reading.
The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age.
They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries.
"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," he says.
Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works.
"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.
If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."
But the Campbell analysis is way off the much more optimistic official figures. The US Geological Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three trillion barrels and that peak production will not come for about 30 years. The International Energy Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and Iran, four countries with much of the world's known reserves, report little if any depletion of reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates," said BP this week.
Indeed, almost every year for 150 years, the oil industry has produced more than it did the year before, and predictions of oil running out or peaking have always been proved wrong. Today, the industry is producing about 83m barrels a day, with big new fields in Azerbaijan, Angola, Algeria, the deep waters of the Gulf of Mexico and elsewhere soon expected on stream.
But the business of estimating oil reserves is contentious and political. According to Campbell, companies seldom report their true findings for commercial reasons, and governments - which own 90% of the reserves - often lie. Most official figures, he says, are grossly unreliable: "Estimating reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a good idea of what a field contains. Reporting [reserves], however, is a political act."
According to Campbell and other oil industry sources, the two most widely used estimates of world oil reserves, drawn up by the Oil and Gas Journal and the BP Statistical Review, both rely on reserve estimates provided to them by governments and industry and do not question their accuracy.
Companies, says Campbell, "under-report their new discoveries to comply with strict US stock exchange rules, but then revise them upwards over time", partly to boost their share prices with "good news" results. "I do not think that I ever told the truth about the size of a prospect. That was not the game we were in," he says. "As we were competing for funds with other subsidiaries around the world, we had to exaggerate."
Most serious of all, he and other oil depletion analysts and petroleum geologists, most of whom have been in the industry for years, accuse the US of using questionable statistical probability models to calculate global reserves and Opec countries of drastically revising upwards their reserves in the 1980s.
"The estimates for the Opec countries were systematically exaggerated in the late 1980s to win a greater slice of the allocation cake. Middle East official reserves jumped 43% in just three years despite no new major finds," he says.
The study of "peak oil" - the point at which half the total oil known to have existed in a field or a country has been consumed, beyond which extraction goes into irreversible decline - used to be back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly because oil has always been cheap and plentiful.
In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from "if" there is a global peak to "when".
The US government knows that conventional oil is running out fast. According to a report on oil shales and unconventional oil supplies prepared by the US office of petroleum reserves last year, "world oil reserves are being depleted three times as fast as they are being discovered. Oil is being produced from past discoveries, but the reserves are not being fully replaced. Remaining oil reserves of individual oil companies must continue to shrink. The disparity between increasing production and declining discoveries can only have one outcome: a practical supply limit will be reached and future supply to meet conventional oil demand will not be available."
It continues: "Although there is no agreement about the date that world oil production will peak, forecasts presented by USGS geologist Les Magoon, the Oil and Gas Journal, and others expect the peak will occur between 2003 and 2020. What is notable ... is that none extend beyond the year 2020, suggesting that the world may be facing shortfalls much sooner than expected."
According to Bill Powers, editor of the Canadian Energy Viewpoint investment journal, there is a growing belief among geologists who study world oil supply that production "is soon headed into an irreversible decline ... The US government does not want to admit the reality of the situation. Dr Campbell's thesis, and those of others like him, are becoming the mainstream."
In the absence of reliable official figures, geologists and analysts are turning to the grandfather of oil depletion analysis, M King Hubbert, a Shell geologist who in 1956 showed mathematically that exploitation of any oilfield follows a predictable "bell curve" trend, which is slow to take off, rises steeply, flattens and then descends again steeply. The biggest and easiest exploited oilfields were always found early in the history of exploration, while smaller ones were developed as production from the big fields declined. He accurately predicted that US domestic oil production would peak around 1970, 40 years after the period of peak discovery around 1930.
Many oil analysts now take the "Hubbert peak" model seriously, and the USGS, national and oil company figures with a large dose of salt. Similar patterns of peak discovery and production have been found throughout all the world's main oilfields. The first North Sea discovery was in 1969, discoveries peaked in 1973 and the UK passed its production peak in 1999. The British portion of the basin is now in serious decline and the Norwegian sector has levelled off.
Other analysts are also questioning afresh the oil companies' data. US Wall street energy group Herold last month compared the stated reserves of the world's leading oil companies with their quoted discoveries, and production levels. Herold predicts that the seven largest will all begin seeing production declines within four years. Deutsche Bank analysts report that global oil production will peak in 2014.
According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide. He says 18 large oil-producing countries, including Britain, and 32 smaller ones, have declining production; and he expects Denmark, Malaysia, Brunei, China, Mexico and India all to reach their peak in the next few years.
"We should be worried. Time is short and we are not even at the point where we admit we have a problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the peak, which I think is 2008, is tomorrow in planning terms."
On the other hand, Equatorial Guinea, Sao Tome, Chad and Angola are are all expected to grow strongly.
What is agreed is that world oil demand is surging. The International Energy Agency, which collates national figures and predicts demand, says developing countries could push demand up 47% to 121m barrels a day by 2030, and that oil companies and oil-producing nations must spend about $100bn a year to develop new supplies to keep pace.
According to the IEA, demand rose faster in 2004 than in any year since 1976. China's oil consumption, which accounted for a third of extra global demand last year, grew 17% and is expected to double over 15 years to more than 10m barrels a day - half the US's present demand. India's consumption is expected to rise by nearly 30% in the next five years. If world demand continues to grow at 2% a year, then almost 160m barrels a day will need to be extracted in 2035, twice as much as today.
That, say most geologists is almost inconceivable. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. Shell says its reserves fell last year because it only found enough oil to replace 15-25 % of what the company produced. BP told the US stock exchange that it replaced only 89% of its production in 2004.
Moreover, oil supply is increasingly limited to a few giant fields, with 10% of all production coming from just four fields and 80% from fields discovered before 1970. Even finding a field the size of Ghawar in Saudi Arabia, by far the world's largest and said to have another 125bn barrels, would only meet world demand for about 10 years.
"All the major discoveries were in the 1960s, since when they have been declining gradually over time, give or take the occasional spike and trough," says Campbell. "The whole world has now been seismically searched and picked over. Geological knowledge has improved enormously in the past 30 years and it is almost inconceivable now that major fields remain to be found."
He accepts there may be a big field or two left in Russia, and more in Africa, but these would have little bearing on world supplies. Unconventional deposits like tar sands and shale may only slow the production decline.
"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid expansion of industry, transport, trade, agriculture and financial capital, allowing the population to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital."
So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There is no company on the stock exchange that doesn't make a tacit assumption about the availability of energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their mindset."
"Unconventional" petroleum reserves, which are not included in some totals of reserves, include:
These can be pumped just like conventional petroleum except that they are much thicker, more polluting, and require more extensive refining. They are found in more than 30 countries, but about 90% of estimated reserves are in the Orinoco "heavy oil belt" of Venezuela, which has an estimated 1.2 trillion barrels. About one third of the oil is potentially recoverable using current technology.
These are found in sedimentary rocks and must be dug out and crushed in giant opencast mines. But it takes five to 10 times the energy, area and water to mine, process and upgrade the tars that it does to process conventional oil. The Athabasca deposits in Alberta, Canada are the world's largest resource, with estimated reserves of 1.8 trillion barrels, of which about 280-300bn barrels may be recoverable. Production now accounts for about 20% of Canada's oil supply.
Oil shalesThese are seen as the US government's energy stopgap. They exist in large quantities in ecologically sensitive parts of Colorado, Wyoming and Utah at varying depths, but the industrial process needed to extract the oil demands hot water, making it much more expensive and less energy-efficient than conventional oil. The mining operation is extremely damaging to the environment. Shell, Exxon, ChevronTexaco and other oil companies are investing billions of dollars in this expensive oil production method. (Link)
Ecuadoran President Flees
Here is a little background.
Ecuador's new President Alfredo Palacio has ordered the arrest of the former leader, Lucio Gutierrez, who was sacked by Congress on Wednesday.
After the vote, the army withdrew support for Mr Gutierrez, who left the presidential palace by helicopter.
Brazil says he has taken refuge in its embassy in the capital, Quito.
Protests over Mr Gutierrez's attempts to overhaul Ecuador's Supreme Court have been mounting across the country for a week.
The US embassy in Ecuador has appealed for calm.
State prosecutors ordered Mr Gutierrez's arrest for the violent crackdown on the demonstrations in which at least one person has been killed.
Shortly after Mr Gutierrez was voted out of office, Mr Palacio appeared at a balcony at the parliament building.
"The arrogance has ended. The dictatorship has ended," he yelled to a crowd below, which chanted back "Dissolve Congress".
Protests have been taking place in Quito as well as in Guayaquil, Ecuador's largest city, and in the cities of Machala on the Pacific coast and Cuenca and Riobamba in the Andean highlands.
Mr Gutierrez's opponents dub him a dictator, saying changes he made to the Supreme Court were attempts to illegally control the judiciary and legislation.
Mr Gutierrez has repeatedly refused to resign, saying he planned to serve out his term in office until January 2007.
The Brazilian foreign ministry issued a statement saying Mr Gutierrez was in the Brazilian embassy in Quito.
The army has closed the airport in Quito, while the newly sworn-in President Palacio has ordered Ecuador's borders to be sealed.
But Mr Gutierrez's spokesman told the BBC the sacked leader did not recognise the Congress vote and would remain in the country.
The government initially resisted the Congress decision but then the armed forces removed their support.
Soldiers who had set up a protective cordon around the presidential palace abandoned their positions.
There were loud cheers from the nearby public square as Mr Gutierrez climbed into a helicopter that had landed on the presidential palace.
The troubles began in December, when Mr Gutierrez sacked almost all of the Supreme Court judges, alleging they were biased against him.
The new court promptly dropped outstanding corruption charges against one of Mr Gutierrez's allies, former President Abdala Bucaram. Mr Bucaram's Roldosista Party had backed Mr Gutierrez's drive to replace the Supreme Court.
The party also helped to block an opposition attempt to impeach Mr Gutierrez in November.
Follow up: he has now been arrested
More Follow up:
When asked why they [the protesting students] were here fighting the police, most gave long passionate explanations. Their fight extends far beyond the president. They were there to fight against capitalism and Ecuador's potentional inclusion in the Free Trade Area of Americas (FTAA) as much as they were to oust the president. There is a strong Socialist influence at the University and a powerful anti-American undercurrent permeates the streets around it.
Peak oil paranoia (rather long)
The man who wrote this is a bit of a paranoid with an apocalyse syndrome. The piece is intriguing if read with a critical eye. As a note, I cut some of the more useless bits from the article.
Thanks Jean Francois for sending me the link.
PS Peak means pek oil production.
As the evidence grows stronger that we are at Peak now (or very close to it), there is a distinct correlation between oil price hikes and military budget increases, weapons deployment, warfare and covert operations around the world. Economists don't consider such things so they don't report on them. Their orthodoxy scorns any integrated view of world developments outside their own discipline.
For long-time readers of FTW I need do little more than discuss a few recent developments to put this in perspective. For the rest I will provide you with some of a great many available dots you can connect if you care to. Most people find themselves unable to tolerate the sight of the pattern which the connected dots reveal. After this, FTW will no longer try to detail the dots of Peak Oil. What we have published over the last seven years is proof enough. We had it right. I refuse to go over it again. Those who get it now, get it. Those who do not may possibly be beyond saving, because their own choices have deprived them of critical months of preparation for the crisis - especially since most of this "preparation" is psychological in nature. It is very hard and very painful to get one's mind to accept this reality.
Nature does not grant time outs.
I recently had a conversation with someone who spent 17 years in the CIA's Directorate of Operations. Thinking of the purge and power shift that has - over the course of the last nine months - decimated the Central Intelligence Agency (long my Bête Noir) and shifted much of its power to the Pentagon, I asked the following question.
"Look, the agency does many things in many roles from raw intelligence gathering, to economic warfare, to satellite recon, to paramilitary operations requiring cover and deniability, to drug smuggling. But since its inception it was always focused in large part on medium and long-term intelligence gathering and covert operations through the costly, patient, expensive means of placing NOCs (non-official covers) or assets in missions where it might take five, ten or fifteen years to bear fruit. These programs were always centered on "what if" contingencies which inherently implied that multiple outcomes were possible; that there were alternative futures to be influenced and shaped.
"Battlefield intelligence is a different critter. It presupposes that there is nothing more important than the battle that has been joined at this moment. If the battle is not won, there are no future choices. Hence nothing matters other than the war that is being fought today. No Yaltas or Potsdams; no future deep cover moles will be needed.
"Every country in the world is betting everything it has on this one hand knowing that after 2007 or 2008 the game ends. The map of the future after that is unknowable and, to large extent, irrelevant. That's why Rumsfeld has won the battle to control American intelligence operations and why the new National Intelligence Director John Negroponte is getting the job.
"Is that right?"
Without the slightest hesitation the former CIA employee answered, "Yes."
It is the ultimate testimony to the madness of Donald Rumsfeld, Paul Wolfowitz and Dick Cheney that there are no more tomorrows left to fix anything. Since 9/11, and especially since a second presidential election was stolen four months ago, the setting for a real Armageddon has been locked in place. It may well have been for years before that.
A recent USA TODAY story, giving us the new word "Petronoia," warned that gasoline prices could jump by 25 cents per gallon within the next few days. That increase, it said, would take $90 million per day out of a consumer economy that relies on profligate spending to sustain already bursting bubbles. How are we getting the money to sustain these bubbles? We are, according to Bill Fleckenstein of MSN, using our houses as ATMs just to keep up, even as the housing bubble has already begun to burst.1 Our paychecks certainly aren't increasing.
Oil has topped $54 a barrel. It's gone up more than 25% in less than three months and fifty per cent over the last year; 400% since 1999. This amid strong signs that global oil production may have already peaked, as declines around the world are not being offset by new production. New fields may come online but the respite will be very short-lived. There may be a few "mega" projects (about a six-day supply for the planet in each) which may produce momentary price declines but the trend is irreversible. Official bodies like the International Energy Administration (IEA) are openly wishing that demand growth might slow in 2005, when actual figures already prove this wish utterly fanciful. China's oil demand is expected to grow by 33% this year. Industrialized and developing nations are expanding their economies as fast as possible to generate cash and liquidity as a means of securing more oil.
The vicious cycle is in full swing. And yet, according to economist Andrew McKillop…
We then move on to actual declines in production. For the majority of non-OPEC producers - (in fact nearly all except Russia and some Central Asian producers) rates of decline are stubbornly high, despite vaunted technology improvements…
One of the biggest problems facing the IEA [a UN sponsored agency], the EIA [a US government agency] and a host of analysts and 'experts' who claim that 'high prices cut demand', either directly or through damping oil economic growth, is that this does not happen in the real world. Since early 1999 oil prices have risen about 400%. Oil demand growth in 2004 at nearly 4% was the highest in 25 years. In each year since 1999 world oil demand growth has been higher than the previous year - as prices rise.2
McKillop's analysis, which essentially says that rising oil prices are either good or of no consequence, falls way short for two reasons. Energy investment banker Matt Simmons a year ago in Berlin stated that he saw the actual point at which price would curb demand at around $180 per barrel. The consumers are bearing most of the costs of these increases. Is this the consumers' choice, or is it simply the point beyond which "the American way of life" will become impossible, regardless of how many incremental cuts people accept?
Go ahead; try to choose to use less oil of your own volition. What reductions are available to you are minimal because the world in which you must make your house payments, feed your family, drive to work and pay your bills is leaving you little choice but to consume more and get less for your money. Only at around $180 a barrel will the consumer no longer be able to subsidize the corporate and economic superstructure on his/her shoulders. This is essentially what Simmons was saying.
The poor will be the first to suffer and they will suffer the most. They will be the first to die.
Secondly, McKillop assumes a "trickle down" benefit to consumers from high prices. International capital flows and your own checkbook should be enough to dispel this belief. Need I say more? Didn't we hear enough about trickle-down from Ronald Reagan?
Oil industry guru Jan Lundberg - who seems to be getting a lot less air time than he used to - recently wrote the following brilliant assessment for (ironically of all places) Electric Vehicle (EV) Magazine. Lundberg got it right.
The end of abundant, affordable oil is in sight, and the implications are colossal. About now in our hydrocarbon phase of human history, we have pulled out of the Earth approximately half of the available petroleum (crude oil and natural gas). The other half still in the ground is harder to extract and may not - as assumed - fuel the global economy or even provide a transition to another phase…
This means that the next tough oil shortage, even if it is not acknowledged as a post-peak oil extraction phenomenon of diminishing supply, will cripple the globalized economy. Understanding of both the economics and social dynamics of collapse is rare, and even when it is present there is an absence of taking into account the "market factor" in ushering in collapse…
Despite the need to be prepared for imminent, final energy shortage - which could happen now or in several years at the latest - people persist in focusing too much on the likely date of the passing of the peak. It is already clear that the oil industry and OPEC numbers on oil reserves are suspect.
The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies. There may be an event that appears to trigger this final energy crash, but the overall cause will be the huge consumption on a finite planet.
The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno-toys and whatnot from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. The damage that several days' oil shortage and outage will do will soon wreak permanent damage that starts with companies and consumers not paying their bills and not going to work.
After an almost instant depression seizes the modern industrialized world, and nation-states break down, the frantic attempts of people to feed themselves, stay warm and obtain fresh water (pumped presently via petroleum to a great extent), there will be no rescue. Die-off begins. The least petroleum-dependent communities will survive best. These "backward" nations will be emulated by the scrounging survivors of the U.S. and the rest of the "developed" world, as far as local food production will be tried - in a paved-over, toxic landscape by people who have lost touch with the land...
The prospects of mitigating peak oil or avoiding collapse are almost nil. U.S. petroleum demand in 2004 grew at its strongest rate in five years. In December the daily consumption of refined oil was 21 million barrels in the U.S, a quarter of world use. The U.S. leads the industrialized world in population growth, part of a domestic policy to assure more car and oil sales…
… The Earth cannot, as of the world oil peak in extraction, give up ever greater quantities of black gold. Most of the world exporting companies are now reducing extraction rates due to fewer discoveries and depleted fields. Oil production in 18 producer countries has passed its peak and is declining faster than previously thought: at about 1.14 million barrels a day.
"International Energy Agency figures put the total spare capacity of all 11 countries in OPEC at just 330,000 bpd (down from 6 million bpd in 2002). Conventional Saudi spare capacity is zero... An IEA report from August 2004 indicates Saudi Arabia needs up to 800,000 bpd of newly discovered oil each year just to offset declining fields and maintain its current production level." [Al-jazeera] - This can't happen, so watch for the ensuing energy crisis.
The world needs to produce another 2,723,530.2 barrels per day by the end of 2005 just in order to stand still…
Petroleum is the Great Leveler, in the sense of "leveling" or flattening oil civilization. But petroleum will also be the Great Leveler in terms of equalizing everyone: People will go through a final, grasping petroleum grab with whatever funds and connections they have, before the attempt fails for good. Then all people will have no choice but to work together or perish. Until then, we have skewed values: for example, when a kindly old lady drives to a shop and has her charitable concerns, the use of oil makes her a killer of the planet and she is not pursuing a sustainable form of transportation. Meanwhile, a mean old man who scowls at little children who walks to the shop might be a much more valuable citizen in a practical fashion that matters to the world.3
THE MOST EVIL STATEMENT I HAVE EVER HEARD
Detroit News columnist Thomas Bray recently described an interview with two "experts"; authors who come from the corporate/industrial/Neocon camp. The aberration of his thinking is symptomatic of the guilt we all share and the consequences we all seem to be begging for.
"We will never stop craving more," say Huber and Mills, "nor should we ever wish to. Energy is what brings light out of dark, civilization out of disorder, prosperity out of poverty."4
What was the title of the book that Bray was so jazzed about? The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy.
Contrast all of the above with the following February 28 quotation from China's Xinhuanet news agency:
Global demand may average 84 million barrels a day in 2005, while daily production in January was only 83.6 million barrels, according to the International Energy Agency. Oil prices have risen 11 per cent in the past three weeks in New York on growing concern that OPEC and other exporters will fail to keep up with demand this year.5
That all of these factors are forming a perfect storm is now clear.
Marshall Auerback, a brilliant economist (www.prudentbear.com) who dares to see the world whole, notes:
"At the time of the 1929 stock market crash, total US credit was 176 percent of Gross Domestic Product. In 1933 with GDP imploding and the real value of debt rising even faster, total credit rose to 287 percent of what was left of GDP…In 2000 at the top of the late bull market, total credit was 269 of GDP. An extraordinary statistic to be sure but dwarfed by today's figure, in which total credit stands at a whopping 304 percent of GDP, according to a recent study by fund manager Trey Reik of Clapboard Hill Partners.
The title of Auerback's essay was, "Last Orders for the US Dollar."6
Auerback opened his treatise with a recent quote from former Federal Reserve Chair Paul Volcker that should have sent politicians (all of us) feverishly to work on a survival plan.
Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember…. Nothing in our experience is comparable… But no one is willing to understand this and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it's what feeds our consumption binge… the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes… We are skating on increasingly thin ice."7
- The world's network of crude oil pipelines also is now operating at virtually 100% capacity. For almost all of 2004, the world's tanker system operated at full capacity too. This sparked an unprecedented rise in taker rates, which added up to $5 to $6 per barrel to the wellhead price of oil in some key long-haul export routes. - Matthew Simmons. Why are no more tankers being built? Because soon there won't be enough oil to ship to cover what it would cost to build them.
- Also from Simmons: [In the oil industry] A lack of qualified manpower is looming high on the list of capacity problems. In addition, the many layoffs and downsizing events that our industry has endured… As a consequence, we now have an aging workforce at a time when the technical intensity of the industry is increasing each year. - Why? Because the industry knows it is going to collapse and no replacements are being trained to fill short-term, dead-end careers.
- Officials of Mexico's state-owned oil company PEMEX have announced that Mexico's largest oil field, Cantarell, will enter permanent decline this year. - Bloomberg, March 1, 2005.
- ExxonMobil is selling its 19 percent stake in China's Petroleum and Chemical Corporation - Forbes, March 2, 2005. This is a likely move to cut losses in the event of war.
- Ukraine and Georgia have agreed to reverse the flow of oil in a strategic pipeline from the Black Sea thus effectively reducing Russia's control over some Caspian basin exports. - BusinessWeek, Feb. 28, 2005. A Ukrainian alliance with NATO would deprive the Russian Navy of access to its Black Sea ports.
- In a move to bypass US-led efforts to reduce her influence in the world's oil supply chain and access to markets, Russia approved the rush construction of three new oil terminals on the Gulf of Finland to supply Europe. - Moscow News, March 1, 2005. (Three days after the above pipeline decision? Surely these power blocks had been making contingency plans for these events for years).
- Saudi Arabia may have already peaked in production as a result of over-producing its fields. Overproduction by water (and gas) injection destroys a reservoir's geologic structure. It is an undisputed certainty that if Saudi Arabia has peaked, the world has peaked. - Al Jazeera, February 20, 2005.
- Oil has been rising steadily in terms of dollars, but now it has begun to increase in price relative to the Euro - James Turk, GATA.
- Petro Canada has decided to invest $3 billion in the development of Alberta's tar sands in spite of high costs, enormous environmental destruction and dwindling supplies of natural gas needed to make steam to wash the sands. - The Globe and Mail, March 2, 2005.
- Royal Dutch Shell, which has downgraded its reserves four times in the last two years (as a result of fraudulent bookkeeping), has announced it may experience a 5% production decline this year. - Forbes, March 2, 2005. The truth comes out.
- Iran and Mexico have signed an MOU for mutual assistance in developing oil and gas projects. - Tehran Times, Feb. 20, 2005.
MILITARY AND POLITICAL
- Spain's foreign minister has voiced concerns held in Britain and elsewhere in Europe that the era of the nation-state is coming to an end as regional powers replace national identity. - The Sun, March 2, 2005. Energy-starved Britain will ultimately be forced to join the EU.
- After Canada recently refused to participate in the US Strategic Missile Shield, the US government accused Canada of relinquishing sovereignty over its airspace and prompted a statement from US Ambassador Paul Cellucci that the US would shoot down missiles over Canada whether Canada gave permission or not. - CP, Feb. 24, 2005. [Two years ago I clipped a story from the National Post stating that Canada should not be surprised when US troops occupied the country to protect the US. From Canada?!]
- US forces in Iraq have apparently attempted to murder an Italian journalist who was freed after negotiations with her captors. They succeeded in killing an Italian Secret Service agent and US stories of the account are falling under widespread criticism and rebuttal. Anti-American sentiment in Italy is bubbling over. - Multiple sources.
- China is experiencing massive shortages of coal to power its electrical generation. - Multiple sources.
- China is already buying and hoarding 60% of the world's commodities: (Oil, Cement, Aluminum, Copper, Zinc, Manganese, Steel, Coal, Gold, Silver, etc.). It has bought so much cement that it has caused a slowdown in US construction. Last year it bought 90% of the world's steel output and shipped it to China - Multiple sources. Why? Because soon there won't be enough fuel for the globalized transport of such heavy things, nor, presumably, for their industrial exploitation. The world may also be at war shortly, further endangering international trade and transport.
- China has announced a 12.6% increase in its defense budget for next year, pushing it into an overt arms race with the US. - Reuters, March 4, 2005. This has put the enduring China-Taiwan flash point back on the front burner as China has warned Taiwan against secession and the US, Japan and Taiwan have countered with equally risky rhetoric against China. Taiwan is crucial because of its location the South China Sea and proximity to smaller but accessible oil deposits in the Spratly Islands. Even more, should China incorporate Taiwan into its borders, its claims to territorial waters as far as the continental shelf would effectively deny Japan any future exploration off its western coast. - Multiple sources. Japan, which has no energy resources, is in deep trouble.
- Chinese energy shortages have resulted in what may be selective blackouts of Japanese auto and other firms manufacturing in China. - Asia Times, December 9, 2004.
- As frictions intensify between Japan and China [Knight-Ridder, Feb. 15, 2005], Japan - America's strongest ally in the Pacific - has been forced to sign an oil agreement with Iran [New York Times, Feb. 16, 2005]. This agreement came as a slap in the face to the US which had opposed it.
- Japan has announced a $1.1 billion emergency plan to build liquefied natural gas terminals. - Bloomberg, February 14, 2005. Twelve days later it was announced that Japanese destroyers had driven away Chinese exploration vessels in international waters that were too close to a possible natural gas field (claimed by Japan) in the East China Sea. - The Herald Sun, January 26, 2005.
- China has begun placing nuclear-capable ballistic missiles on some of its submarines for the first time. - The Washington Times, December 3, 2004.
- Last November a Chinese nuclear submarine intruded deep into Japanese territorial waters and was escorted (chased) by Japanese Navy ships back into international waters. - The Asia Times, Jan. 16, 2005
- China and India have agreed to hold first-ever joint naval exercises in the Indian Ocean. - San Francisco Chronicle, Nov. 13, 2004.
- China is beginning a push to control the strategic Straights of Malacca through which 80% of its imported oil passes. This strategic waterway - only 1.5 miles wide at its narrowest point - lies between the countries of Indonesia, Malaysia and Singapore. - Asia Times, March 2, 2005. Yes, and 40% of the world's piracy occurs there.
- Indonesia has sent warships in an escalating dispute with Malaysia to an island off its west coast. The subject of the dispute: Malaysian oil exploration. - www.news.com.au, March 6, 2005.
- The following day Indonesia dispatched F16 fighters to the Malaysian border, escalating the oil conflict. - The Standard, Match 7, 2005.
- A number of stories have reported that Japan is secretly considering the abandonment of its pacifist constitution and - if it so chose - could have nuclear weapons in months, if not weeks. - Multiple sources.
- Britain's parliament is in revolt over a proposed "terrifying" house arrest plan which would enable the government to order residents locked up in their own homes without trial. - The Independent, March 2, 2005.
- Venezuela intends to purchase advanced MiG 29s from Russia, capable of downing F16s [and having no software systems that can be compromised by US technology]. - Reuters, Feb. 12, 2005.
- Venezuela (the world's fifth largest oil exporter) has purged its state-owned oil company PdVSA of pro-American managers and is implementing a 17% tax increase on the revenues of foreign oil companies doing business there. - Multiple sources.
- Venezuelan President Hugo Chavez has traveled to New Delhi, India where he chose to make a public statement that he would cut off Venezuelan oil supplies to the US in the event of any intervention or a US-directed attempt on his life. The Indian government has thus tacitly endorsed the threat. Meanwhile, the US ambassador to Venezuela has imponderably replied that if that happened the US would just go somewhere else to get its oil. [Where? Iran? Canada (which is signing contracts with China)? West Africa? There is no elasticity anywhere.] - Multiple sources.
- Venezuela has sold its (already in decline) San Cristobal oil field to India. - Times of India, March 6, 2005
- President Bush has given Syria a non-negotiable deadline of May 1 to withdraw its forces from Lebanon. One million Lebanese (almost a quarter of the population) have marched in the streets in protest. - Multiple sources.
- Federal Reserve Chairman Alan Greenspan told Congress the record U.S. budget deficit is "unsustainable'' and that spending cuts are needed before costs balloon for Social Security and other benefit programs. - Bloomberg, March 2, 2005.
- German Chancellor Gerhard Schroeder has stated that high oil prices are threatening the global economy and that those prices will be one of the most important items on the agenda of the coming G-8 summit. - The Daily Star, March 1, 2005.
- The Bank of International Settlements has made it official: the dollar dump is underway. Since 2001 the number of dollars held by Asian central banks has fallen by 13% and the rate of sell-off is increasing. - Reuters, March 6, 2005.
- OPEC has announced that oil prices could reach $80 per barrel within two years. - Agence France Presse, March 3, 2005.
- A research foundation in Dubai has affirmed that western banks have rigged and suppressed gold prices. - Gold Anti-Trust Action Committee, http://www.lemetropolecafe.com/.