Thursday, December 25, 2008

A tale of Christmas Future

As I sat listening to the homily this morning at Christmas Liturgy the image of the Nativity scene in Bethlehem played out in my mind. I couldn't help but contrast this image of a quiet peace amongst the shepherd's fields with the consumer mentality that so dominates our existence today.

Jesus said " No one can serve two masters, for either he will hate the one and love the other; or else he will be devoted to one and despise the other. You can not serve both God and Mammon." Matthew 6:24

(Mammon is a term that was used to describe riches, avarice, and worldly gain in Biblical literature. It was personified as a false god in the New Testament. The term is often used to refer to excessive materialism or greed as a negative influence.)

Mammon is what our society is all about. It's no accident that we are often referred to collectively as "consumers". I always like to say that we in America are intent on proving Jesus wrong. We think we can serve two masters. Well, we will at least try. Mammon has held a special place in our market driven economy, but I believe we are entering the end days of this consumer oriented existence.Just the thought of being a consumer is disgusting --it makes me think of a parasite. I forget the exact number, but I think something like 70% of our economy is based on the consumer. In simple terms we consume and no longer produce. Unfortunately for the most part we've been consuming things we don't make or need, with money we don't have. We think we have credit. All it really is though is debt and debt has made our world go round.

What a great gig. Some poor foreigner works his butt off for a pittance while we sit back and consume and consume. Here's the real deal : You can't borrow your way to prosperity. We are finding out that a bill does come due and does need to be paid. No additional TARP plans or stimulus packages are going to change the situation. Retail sales are down big-time, car sales are in the toilet, stock prices and real-estate values have fallen off a cliff. We're not as rich as we thought we were and the ramifications are going to be monumental.

The next several Christmas's might see a premium on such things as family, fellowship, friends and simple food. In the end, maybe something good will come out of all of this. We've been serving Mammon way too long.

Father closed the Christmas homily with a quote for Isaac the Syrian on the Incarnation. I'll have to do more reading of Isaac. My favorite along these lines is from Athanasius "God became man so that man might become a god."

If we ponder that line the only conclusion is that the Incarnation was one awesome Christmas gift and awesome might be a vast understatement.

Tuesday, December 16, 2008

Boston Tea Party

Today, December 16 is the anniversary of the Boston Tea Party. The strange thing about the Tea Party is that it more often than not, associated with the concept of " no taxation without representation". But as in many situations, the truth is not quite that simple. This Wikipedia entry provides a little background on this event from 1773:

Hancock organized a boycott of tea from China sold by the politically well-connected British East India Company, whose sales in the colonies then fell from 320,000 pounds to 520 pounds. By 1773, the company had large debts, huge stocks of tea in its warehouses and no prospect of selling it because smugglers, such as Hancock, were importing tea from the Netherlands without paying import taxes. In response to this the British government passed the Tea Act, which allowed the East India Company to sell tea to the colonies directly and without "payment of any customs or duties whatsoever" in Britain, instead paying the much lower American duty. This tax break allowed the East India Company to sell tea for half the old price and cheaper than the price of tea in England, enabling them to undercut the prices offered by the colonial merchants and smugglers.[citation needed]
Many American colonists, particularly the wealthy smugglers, resented this favored treatment of a major company, which employed lobbyists and wielded great influence in Parliament. Protests resulted in both Philadelphia and New York, but it was those in Boston that made their mark in history. Still reeling from the
Hutchinson letters, Bostonians suspected the selective removal of the Tea Tax was simply another attempt by the British parliament to squash American freedom. Samuel Adams, wealthy smugglers, and others who had profited from the smuggled tea called for agents and consignees of the East India Company tea to abandon their positions; consignees who hesitated were terrorized through attacks on their warehouses and even their homes.[1]

So it was actually a removal of a tax that angered the colonists-- not a tax increase. You can't make that up. I wonder if Sam Adams and his boys would be considered "terrorists" in today's world?

Sunday, November 23, 2008

Gospel According To Luke

Over the past couple Sunday's the Gospel readings at Liturgy have come from the Book of Luke and have been chock full of content. Last week was the familiar story of The Good Samaritan ( Luke 10:25-37).This well-known parable will get it's own post shortly.

Today's reading was from Luke 12: 16-21.

16And he spake a parable unto them, saying, The ground of a certain rich man brought forth plentifully:
17And he thought within himself, saying, What shall I do, because I have no room where to bestow my fruits?
18And he said, This will I do: I will pull down my barns, and build greater; and there will I bestow all my fruits and my goods.
19And I will say to my soul, Soul, thou hast much goods laid up for many years; take thine ease, eat, drink, and be merry.
20But God said unto him, Thou fool, this night thy soul shall be required of thee: then whose shall those things be, which thou hast provided?
21So is he that layeth up treasure for himself, and is not rich toward God

What I find fascinating about this passage is that it is so universal in it's application. In this particular parable we are dealing with a rich man who is enjoying the fruits of his labor and is doing nothing "wrong'' per se. He's not a bad man-- at least as far as we can tell. In fact he is being prudent in that he is building bigger storage facilities for his goods. I think the message here is that he is totally focused on his worldly existence and is busy making plans for his future, yet his life is about to end that very night and he is woefully unprepared for that. When I think about it this story in a nutshell is about all of us. In some cases we are making business plans. In other situations we are making Thanksgiving and Christmas plans.We are all about planning our future and we spend a lot of time involved in this planning. There is nothing inherently wrong with any of that kind of stuff. It's just that the emphasis is totally misplaced and that emphasis --the eat, drink and be merry and the storing up of our earthly goods is what so preoccupies much of our existence in present day America. We are the rich man in the story, we just don't want to admit it.

It's also interesting to look at the 3 verses preceding this parable for some context:

13And one of the company said unto him, Master, speak to my brother, that he divide the inheritance with me.
14And he said unto him, Man, who made me a judge or a divider over you?
15And he said unto them, Take heed, and beware of covetousness: for a man's life consisteth not in the abundance of the things which he possesseth

I believe the wisdom proclaimed in verse 15 will become more and more evident as we work our way through the economic mess we find ourselves in. Maybe some good will come out of our travails after all.

Saturday, November 22, 2008


This morning there are numerous stories documenting the mounting problems at Citigoup .Here's an example from the paper of record Shares Falling, Citigroup Talks to Government .

So the mighty Citi is in trouble and company top dogs are "entered into talks with federal officials about how to stabilize the struggling financial giant. "

Screw Citigroup , Sandy Weill and Chuck Prince!

I did my Saturday Post Office run and pulled an official looking document with a Citi logo on the envelope out of my PO Box ( I do have a Citi MasterCard). Amazing! This is what the letter from Citi said:

1) We are changing how we calculate your variable APR for purchases:
We are increasing your variable APR for purchases . Your purchase APR will equal the
US Prime Rate plus 8.99% with a minimum APR of 14.99%. As of October 1,2008 this purchase APR is 14.99%.
2) We are changing how we calculate your variable APR for cash advances:
We are increasing you variable APR for cash advances. Your cash advance
APR will equal
the US Prime Rate plus 16.99% with a minimum APR of 21.99%. As of October 1,2008 this cash advance APR is 21.99%.

Number 3 had something to do with what they call a Default APR. I'm not sure that that is but this was the bottom line.

The default APR equals the greater of 1) the Prime Rate plus up to 23.99% or 2) up to 29.99%

If I understand this properly they can charge me almost 30% for the right to borrow money from them. There is a word in the English language called usury. Some consider it a sin. It's good to know that our government is considering helping Citi get out of their financial mess. I think they should just die.

Citigroup RIP!!!

Tuesday, November 4, 2008

Election Day

I woke up this morning and with great excitement drove with my wife over to the local firehouse to cast my ballot. The act of voting , especially in a Presidential Election always gives me a special feeling---almost one of reverential awe. When I think of the joyful faces of the Iraqi's a few years ago after they voted for the first time and I often ponder how much we take for granted in our own country.

There is no mystery as far as my vote. Obama! I think we are looking at an Electoral Landslide tonight, but even with that, I really wonder if our new President has any idea what he is about to encounter. We as a nation have spent ourselves silly. We are in the early stages of what could be an ugly recession and have very little ammunition to fight it with. Things could get ugly quickly. My vote for Obama had very little to do with policy ---I guess his opposition to the Iraq War would be one stance in particular. Taxes are probably going to go up, and who really wants to pay more taxes? It's pathetic that the current campaign dialogue has focused on taxes, yet almost nothing has been said about our prodigal ways. Who do we expect is going to pay the bill for all of our spending?

I said back in April of '07 that I was betting Obama on the come and my support was based more on hope than anything else. Well, hope is grossly underrated as a human emotion and something we've not had much of--at least in the political sense over much of my adult life.

As far as hope is concerned, this short essay from yesterday's CS Monitor is worth a read. It was written by a 55 year old white conservative Southerner who was dragged by his wife out to canvass for Obama. Here's a tid-bit:

I don't see either of the candidates as having all the answers.
I've learned that this election is about the heart of America. It's about the young people who are losing hope and the old people who have been forgotten. It's about those who have worked all their lives and never fully realized the promise of America, but see that promise for their grandchildren in Barack Obama. The poor see a chance, when they often have few. I saw hope in the eyes and faces in those doorways.

Wednesday, October 8, 2008

Georgia on my Mind

Came across this article in the NYTimes the other day. The gist of the piece can be gleaned from this passage:

But Lincoln A. Mitchell, a Georgia expert at Columbia University, contended that Mr. Saakashvili now presided over a “semiauthoritarian” state, while saying that it was the most democratic of the former Soviet states in the region.
“The reality is that the Saakashvili government is the fourth one-party state that Georgia has had during the last 20 years, going back to the Soviet period,” he said. “And nowhere has this been more apparent than in the restrictions on media freedom.”

What bothers me in this case is the lack of follow up by many of our traditional "News" outlets. Maybe we Americans are an incurious sort, but we have actually had Presidential and Vice-Presidential candidates allude to the possibility of US military support for Georgia , in the event of further conflict with Russia. The possibility of bringing Georgia into NATO is dangled by candidates from both parties. Do we really need to add another semi-authoritarian regime into our satellite system?

I'm wondering if US interest in Georgia is another example of Realpolitik. Are we really helping push for a new democratic state or are we simply developing another client for weapons sales and another piece for an ongoing geopolitical chess game. As I said in The Bear is Back it's a whole new game now in the US-Russian rivalry and I'm not entirely sure we still have the upper hand.

Tuesday, September 30, 2008


Ran across this post today on Lew The Rockwell site is a pretty hard-core libertarian site. I contend there is much wisdom there to be acquired. This post on LIBOR is deep but it's worth a read and a bookmark. I guarantee we'll be hearing more about LIBOR as our credit woes grow.

What’s in a Number? Donald MacKenzie on the Importance of Libor

Tuesday, September 23, 2008

No to Paulsen-Bush Bailout!!!

Thanks to Mike Morgan for posting this Bloomberg story written by Mark Pittman almost a year a go. I can't go along with this bailout. I know, I know we are facing Financial Armageddon--or so says Hank. Read it and weep.

Paulson's Focus on `Excesses' Shows Goldman Gorged
By Mark Pittman
Nov. 5, 2007 (Bloomberg) -- Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that ``yesterday's excesses'' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc.

Paulson, 61, doesn't mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg.

Goldman, the most profitable investment bank, was one of 14 primary dealers of U.S. Treasuries who contributed to a three- year binge as $1 trillion of subprime mortgages were packaged and sold to investors. The value of Goldman's outstanding subprime bonds trails Lehman Brothers Holdings Inc.'s $33 billion, out of $106.8 billion created during Paulson's years at Goldman, and Morgan Stanley's $28.8 billion, out of $82.5 billion.

``He should admit to having been involved in creating the problem that we have now,'' said Representative Brad Miller, a North Carolina Democrat, who introduced a bill Oct. 22 to make firms packaging subprime mortgages liable for bad loans in some circumstances.

The subprime crisis developed earlier this year when falling home prices triggered defaults by homeowners who wouldn't have normally qualified for a mortgage. Many were unable or unwilling to make adjustable-rate payments that were due to rise. Home foreclosures doubled in the third quarter from a year earlier to 635,159, RealtyTrac reported Nov. 1.

Largely Contained
Starting in March, Paulson said the damage was ``largely contained'' and was no risk to the larger economy. When other credit markets began to be affected, he and others began pushing for solutions.`

`I can't help but notice that when middle-class homeowners were losing their homes to foreclosure, he was pretty nonchalant about it,'' Miller said of Paulson. ``But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain.

''Paulson declined to comment through spokeswoman Michele Davis, who said, ``he can't talk about Goldman business.'' Spokesman Michael DuVally of New York-based Goldman declined to say how much subprime mortgages contributed to the investment bank's profits, or Paulson's compensation, during his tenure from May 1999 through June 2006.

Goldman paid Paulson $38.5 million for 2005, and he received an $18.7 million bonus for the first half of last year.

Bet Against Subprime

While competitors reported losses from their subprime portfolios in recent months, Goldman said Sept. 20 that it profited from the market's decline by using derivatives to bet that mortgage securities would continue to fall.

Paulson's involvement in the subprime crisis ``points out that there needs to be complete accountability up and down the system,'' said Allen Fishbein, the director of credit and housing policy at the Consumer Federation of America in Washington. ``Goldman wasn't alone. All the brokerages did this.

''Goldman ranks 10th among 118 issuers, based on the amount of subprime loans still on the market. Bonds with a face value of $484.6 billion remain from those created in the years Paulson ran Goldman.


Market leader Countrywide Financial Corp. has $40.7 billion in subprime bonds still on the market, or 8.4 percent of the total. GMAC LLC's Residential Capital LLC has $34.4 billion. Lehman's $33.1 billion leads Wall Street firms. The amounts tally the securities issued, not what remains on the banks' books.

Calabasas, California-based Countrywide, the nation's biggest home lender; ResCap, the Minneapolis-based home lending arm of General Motors Corp.'s finance subsidiary; and Goldman were among those competing to create pools of mortgages consisting mostly of subprime loans, made to borrowers with poor credit records or high debt.

Goldman has more subprime debt outstanding than Credit Suisse, which has almost $10 billion; Citigroup Inc., with $6.8 billion; or JPMorgan Chase & Co., with $7.8 billion.

Losses on holdings of subprime securities have already claimed the jobs of two chief executive officers. Citigroup yesterday accepted the resignation of CEO Charles Prince after saying its holdings of subprime securities may cause writedowns of as much as $11 billion. Merrill Lynch CEO Stan O'Neal left last week amid writedowns of more than $8 billion.

House Bill

The data on subprime bonds, compiled by Bloomberg from reports by debt servicing companies, don't include all of the mortgage bond offerings managed by any of the firms. That's because all of them handle offerings by bond issuers outside of Wall Street, including Irvine, California-based New Century Financial Corp., a subprime lender now in bankruptcy.

The House bill Miller introduced is backed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee. One provision would make firms that package and sell subprime mortgages liable for damages if loans violate certain minimum standards, including ensuring a borrower's reasonable ability to repay.

Paulson criticized the liability idea in an Oct. 16 speech at Georgetown University in Washington.``We need to ensure yesterday's excesses are not repeated tomorrow,'' Paulson said. Penalizing Wall Street for packaging mortgage loans ``is not the answer to the problem,'' he said.

Potential Paralysis

The House measure would ``potentially paralyze securitization,'' which, Paulson said, has been ``extremely valuable in extending the availability of credit to millions of homeowners nationwide and lowering the cost of financing.

''In New Delhi on Oct. 30, Paulson repeated his pledge to find what went wrong in the financial system. ``We need to shed light on it and make the policy adjustments so this doesn't happen again,'' he said.

When the subprime mortgage issue exploded as an economic and political issue this year, Federal Reserve Board Chairman Ben S. Bernanke was the federal government's point man. He was called before Congress to defend regulators' failure to prevent lending abuses.

Paulson's public role increased in the past month as the credit crunch spread to the commercial paper markets and off- balance-sheet structured investment vehicles, known as SIVs. He urged major lenders in a Sept. 12 meeting in Washington to help subprime borrowers keep their homes.

Saving SIVs

Paulson and Robert Steel, a former Goldman Sachs vice chairman who is the Treasury's undersecretary for domestic finance, helped persuade Citigroup and other banks to set up an $80 billion partnership to buy assets from any SIVs that couldn't refinance their debt.

Goldman under Paulson created 58 mortgage pools branded under the acronym of GSAMP, which originally stood for Goldman Sachs Alternative Mortgage Products, starting in July 2002. The value of the loans at risk of default is almost 50 percent for one Goldman pool, according to Bloomberg data, which includes pools identified as containing home equity financings as well as subprime mortgages.

The average delinquency rate for subprime bonds sold from May 1999 through June 2006 is 19.3 percent as of yesterday, according to data compiled by Bloomberg. Among the top 20 issuers that have more than $5 billion outstanding, Goldman's GSAMP ranks ninth with 21.7 percent for delinquencies of 60 days or more, foreclosures or real estate that has been taken away from borrowers.

Higher Delinquencies

That rate is higher than for JPMorgan, with 20.8, and Citigroup, with 19.9 percent, according to data compiled by Bloomberg through October. Goldman's delinquency rate is lower than the 26.2 percent for bonds in Deutsche Bank AG's ACE trust, as well as 25.1 percent for Barclays Capital's SABR and 23.8 percent for Merrill Lynch's MLMI.

One of Goldman's bonds, GSAMP 2006-HE2 B2, is valued at 47 cents on the dollar, to yield 14.5 percent, according to Merrill Lynch. The pool, which was sold March 1, 2006, already has a delinquency rate of 16.4 percent. The bond was cut five levels from investment-grade Baa2 to a junk rating of B1 on Oct. 11 by Moody's Investors Service.To contact the reporter on this story: Mark Pittman in New York at

Friday, September 19, 2008

Guns and Butter Part 2

Guns and Butter was a term often used to describe the policies of LBJ in the 60's whereby massive Government spending was implemented along with massive military spending needed to fight the Vietnam War. The end result was inflation,stagflation and 20% interest rates over the next decade or so. Given the announcement last night of the Fed's stepping in to buy toxic mortgages I think we are on our way to a '70's repeat. The U.S. is already the world's biggest debtor nation and over the past 7 days or so we've added probably another $300-$1trillion in additional unfunded obligations. Remarkable. I have no ideas where the markets are headed longer term but I am glad a have a reasonably decent position in gold and gold related holdings.

Wednesday, September 17, 2008

George W-Our First MBA President

What irony, I couldn't help thinking today as I watched the DJIA get slammed another 400+ points ( closed below 10,700) and Gold scream $80+ to the upside, that George W Bush and Dick Cheney, the MBA (Harvard) President and the CEO Vice-President (Halliburton) were presiding over the utter destruction of our private market system. Let' s see ,over the past week we've seen the Fed's step into the Freddie/Fannie mess to the tune of $100-200 billion. Last night it was AIG for $85 billion .Let's not forget Bear Stearns a couple months ago. On top of all that, Lehman Bros., a company that survived the Civil War and the Great Depression got toe-tagged. What a record of economic stewardship for W!

Saint Paul said, " For the wages of sin is death" (Romans 6:23). To me the wages of the Bush ownership society is fascism. Think that is too outrageous? This statement is usually attributed to Mussolini ( in all fairness there is some debate about the accuracy of the attribution)

"Fascism should more properly be called corporatism because it is the merger of state and corporate power."

Even so, the direction we are now headed seems to have some echo from the '30's as Thomas J. DiLorenzo points out in this essay ( written back in '94)

So- called corporatism was adopted in Italy and Germany during the 1930s and was held up as a "model" by quite a few intellectuals and policy makers in the United States and Europe. A version of economic fascism was in fact adopted in the United States in the 1930s and survives to this day. In the United States these policies were not called "fascism" but "planned capitalism." The word fascism may no longer be politically acceptable, but its synonym "industrial policy" is as popular as ever.

1-20-09 can't come soon enough!

Monday, September 1, 2008

She Must Be Wonderwoman

I was wondering how long it was going to take before the media started their own vetting process of Gov. Sarah Palin. I really can't believe John McCain made this decision. I used to think he was a capable leader. I hope I am not too harsh in considering Sarah Palin laughably unprepared to be Vice-President of the United States. It's not worth even debating. What I've wondered from the first little bit I heard about her is, "what kind of strange person is this". She just gave birth to a down syndrome baby. The baby is 5 months old. She preaches the value of life and family values and is now going to leave this child at 5 months of age and run for Vice-President. Pathetic.

Monday, August 18, 2008

How He Will Improve Our Lives?

So , Obama is getting a little heat for a lack of "specifics" in his hope message . That is certainly a legitimate and fair criticism. What stood out for however me in reading the NYTimes piece was the comment made by the Governor of Tennessee, Phil Bredesen,

"Instead of giving big speeches at big stadiums, he needs to give straight-up 10-word answers to people at Wal-Mart about how he would improve their lives.”

special emphasis on the last thought--how he would improve their lives. Politicians are so unbelievable in their arrogance. Instead of worrying about improving my life for me, why not spend a couple minutes and think about ways to stop screwing up our lives. How about figuring out ways to deal with the multi-trillion dollar unfunded liabilities we face in the not too distant future?All these guys know how to do is promote themselves, their careers and spend our money-- please Governor Bredesen don't worry about "improving my live"--I'll focus on that.

On a serious note, it is exactly this expectation that some guy is going to come into office and be able to somehow magically change the world and make everything better. With those kind of expectations going in is it any wonder that we become so disappointed with those we choose to lead us?

Wednesday, August 13, 2008

The Bear is Back

In this case it's not the market I'm talking about. Russia is the subject and there is no doubt that they are back as a regional power and there is not much the US can do about it. George Friedman's Stratfor piece explores the ramifications of the Russia- Georgia conflict from multiple angles.

One of the first questions is how, given the massive quick Russian response to the Georgian invasion of S. Ossetia ( obviously the Russians had been prepared for this offensive for some time) could the US allow it's closest ally in the region to walk into such a trap? Was it a failure of intelligence or a misreading of Russian attitude and will? Either way-- not good. I thought Condi Rice was a Soviet expert. Maybe she is just another academic with no real world experience.

The end result is that Russia has shown the world that they are the boss in their neighborhood and that other former Soviet Republic states might now realize that the while the US is bogged down in battles in the Middle East we have nothing much to offer them other than empty words--- the old gum flapping routine. Forget about ant-missile defense sysems or additions to NATO. What I don't understand is this need for the US to continue to try to expand NATO. It would seem to be like spitting into Russia's face.

As of today Putin is stronger domestically and the Russians have reasserted their leadership of the region. Our European " friends" must wonder where their bread is buttered.They need Russia a hell of a lot more right now than they need the US ( energy supply) . How does this all play into what's coming soon -- the conflict with Iran. All in all another mess. W's inane comment about looking into Putin's eyes just speaks to his utter incompetence on the world stage. 1/20/09 can't come soon enough.

Wednesday, July 30, 2008

South of the Border--One More Time

Another update to two previous posts on Mexican Oil production, Revisit South of the Border and South of the Border. This is the latest out of Pemex, Mexico's Pemex says yr-end oil output to miss goal.For those in the "glass half-full school" chew on this:

"Mexico is the world's No. 6 producer and No. 10 exporter of crude oil, according to the U.S. Energy Information Administration, but declining crude output and exports are threatening the country's position as a top U.S. supplier."

I know CNBC's Larry Kudlow and many others would simply say, "drill,drill,drill ", but seriously is there any plan to make replace that supply--and please Senator Schumer, tapping the Strategic Reserve is not a plan right now.

Sunday, June 22, 2008

Scary Stuff

The stickiness of gas prices above $4/gallon and the proximity of the July4 holiday and peak driving season has sparked a plethora of nonsense from the usual suspects. The clowns in Washington are advocating a policy of drill,drill drill, offering that as a way to gain energy independence. After all, there is so much untapped oil right here in the USA. Combine that lunacy with the usual media blowhards that are hammering "speculators" and the Saudi's and pretty soon it's easy to miss an important story. I found the EIA Net Export #'s inside of a post by Westexas, on Take a look. ( click on chart for sharper image)

Here's the deal. What we are seeing is a net decline in exports over the past couple years. I'm sure the circumstances are different in each particular country, ranging from more domestic use ( maybe Iran and Venezuela) to depletion ala Norway and Mexico. It's interesting that Russia is at the top of the list as far as net positive goes. I see a big comeback for the Russian bear. What is not getting factored into any mainstream conversation is that this decline in net exports might not be a one off event. There is a school of thought that says that as many of these export countries see more and more oil revenue, their societies will grow economically and they will end up using more and more of their crude oil production domestically. If that ends up being the case we here in the US are really up the creek.

Monday, June 9, 2008

The Long Emergency-- American Style

In his book The Long Emergency, James Howard Kunstler paints a picture of what he sees as our societal future post peak-oil. One of his themes is the potential unravelling of the social structure as the have-nots are priced out the gasoline market and now truly face a future on the economic fringes. He believes mob violence is a possibility.

It's funny but because Kunstler offers this vision he is sometimes criticized as an alarmist and a wacko. Well, it was with interest that I read this story this morning in the NY Times Rural U.S. Takes Worst Hit as Gas Tops $4 Average :

"Here in the Mississippi Delta, some farm workers are borrowing money from their bosses so they can fill their tanks and get to work. Some are switching jobs for shorter commutes.
People are giving up meat so they can buy fuel. Gasoline theft is rising. And drivers are running out of gas more often, leaving their cars by the side of the road until they can scrape together gas money.
The disparity between rural America and the rest of the country is a matter of simple home economics. Nationwide, Americans are now spending about 4 percent of their take-home income on gasoline. By contrast, in some counties in the Mississippi Delta, that figure has surpassed 13 percent.
As a result, gasoline expenses are rivaling what families spend on food and housing."

I don't want to be unsympathetic to the economic pain being felt right now, but this is happening at $4 a gallon. What's the story at $5 or $6?

Thursday, May 29, 2008

What More Can You Say?

The constant chatter about Iran and a potential war there has not abated much over the past month or so. I stumbled across this today while browsing Juan Cole's site. It leaves me speechless. Here's a takeaway:
( Thanks to Jason Lepold for great work on this)

During a trip to the Middle East in March 1996, Vice President Dick Cheney told a group of mostly U.S. businessmen that Congress should ease sanctions in Iran and Libya to foster better relationships, a statement that, in hindsight, is completely hypocritical considering the Bush administration’s foreign policy.
“Let me make a generalized statement about a trend I see in the U.S. Congress that I find disturbing, that applies not only with respect to the Iranian situation but a number of others as well,” Cheney said. “I think we Americans sometimes make mistakes . . . There seems to be an assumption that somehow we know what’s best for everybody else and that we are going to use our economic clout to get everybody else to live the way we would like.”
Cheney was the chief executive of Halliburton Corporation at the time he uttered those words. It was Cheney who directed Halliburton toward aggressive business dealings with Iran—in violation of U.S. law—in the mid-1990s, which continued through 2005 and is the reason Iran has the capability to enrich weapons-grade uranium.
It was Halliburton’s secret sale of centrifuges to Iran that helped get the uranium enrichment program off the ground, according to a three-year investigation that includes interviews conducted with more than a dozen current and former Halliburton employees.

Tuesday, May 20, 2008

Peak Oil-- Are We There Yet?

I have to give props to the inimitable James Howard Kunstler who pretty much hit it out of the ball park in his weekly column this week. Classic Kunstler:

What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage. The logical conclusion of all this is not what the American public wants to hear: we have become a much poorer society and are now faced with the unavoidable task of making major changes in how we live. All the three-card-monte moves at the highest level of finance lately amount to an effort to avoid the unavoidable, acknowledging our losses. Certainly the political fallout of all this will be awesome. But it's not about politics, really. It's about the entire society's inability to form a workable new consensus of reality.

Fellow Colgate alum Kevin Phillips has a new book "Bad Money: Reckless Finance, Failed Politics & the Crisis of American Capitalism , detailing the various scams the "Powers that Be" have laid on us --oh going back at least to the Kennedy years. It's a sad tale. The Government Numbers racket is the term I believe is used to describe the "Powers That Be" that lead us in America.

On top of all that T. Boone Pickens was on CNBC this am. He pretty much simplifies it all-- the world produces 85 million barrels of oil a day and currently needs 87. Prices are going higher. Worth watching

Saturday, May 17, 2008

Appeasement, Diplomacy and 4G Warfare

It's happening again. With W's speech to the Israeli Knesset this week, the mouthpieces on the right are loudly attacking Obama as naive and willing to surrender to our mortal enemies and give up on the war on terrorism (whatever that is). John McCain is predicting victory in Iraq by 2013 if he is elected President. I just wish that someone could explain what victory in Iraq is exactly. What is our objective in Iraq--- and I'm not looking for the answer to be a one word response: Victory.

William Lind pens an interesting article about the delusions held by those in power when it comes to Iraq and "progress in our objectives". As Lind points out, this conflict is a Fourth Generation War:

"One of the most common signs that America's leadership is clueless about Fourth Generation war is the language they use. Fourth Generation war has few if any defining moments. Nor does it have "turning points," another common Bushism. In his testimony to Congress, U.S. Gen. David Petraeus revealed the limits on his own grasp of 4GW when he said, "We've got to continue. We have our teeth into the jugular, and we need to keep it (sic) there."Opponents in 4GW have no jugular. 4GW is war of the capillaries. What U.S. forces have their teeth into in Iraq is a jellyfish."

The hackneyed response by those who support the war in condemning war opponents as surrendering to our mortal enemies is just another political expedient smokescreen that avoids any serious discussion of the issue at hand. I believe the effectiveness of this approach is over. This will become more and more evident as we move into the fall campaign. The American people signed up for "Stay the Course" a couple years ago-- and I think they are finally beginning to look at what is really behind the curtain. One clue, it's certainly no wizard.

Monday, April 28, 2008

A Conversation

Back in my senior year at Colgate I took a Senior level seminar, Philosophy and Faith. Much of the material was centered on Liberation Theology, Feminist Theology and other such theologies. I have to admit, for someone coming from the Orthodox Christian tradition the content was tough for me to embrace. To this day, I believe that the focus of these theologies stray from the"seek ye first the Kingdom" guidance we are given in Matthew. That being said however, my viewpoint was formed growing up white in what would have to described as a "privileged" upbringing. In A Jeremiad for the Reverend Jeremiah I commented on the great disservice rendered to the public by our Media, when discourse is limited to 20-30 second sound bites that lack context and are continually repeated to provoke emotional responses from the audience.

Compare the handling of the Rev Jeremiah Wright story by our major news organizations with the way Bill Moyers conducted his interview with the Reverend last week. I have had several people comment to me recently about how upset they are by the Wright issue and how this somehow reflects poorly on Barrack Obama. It's pretty obvious that there is so much more to Reverend Wright than can be gathered in those 20 second sound -bites. Watch and listen to the interview.

Here's the other sad thing--- the almost total literary and biblical ignorance of the population. I wonder how many people are even vaguely familiar with what Wright is referring to. Here's a little help:

Psalm 137 (Greek Numbering 136)

By the rivers of Babylon we sat and wept when we remembered Zion.
2 There on the poplars we hung our harps,
3 for there our captors asked us for songs, our tormentors demanded songs of joy; they said, "Sing us one of the songs of Zion!"
4 How can we sing the songs of the LORD while in a foreign land?
5 If I forget you, Jerusalem, may my right hand forget its skill.
6 May my tongue cling to the roof of my mouth if I do not remember you, if I do not consider Jerusalem my highest joy.
7 Remember, LORD, what the Edomites did on the day Jerusalem fell. "Tear it down," they cried, "tear it down to its foundations!"
8 Daughter Babylon, doomed to destruction, happy are those who repay you according to what you have done to us.
9 Happy are those who seize your infants and dash them against the rocks.

Sunday, April 20, 2008

The Heart of the Matter

Once again I have to point to Juan Cole. In one simple paragraph he points out the futility of the matter. I'm willing to bet that 99% of American's wouldn't be able tell who is affiliated with whom in Iraq. Who exactly are we fighting there? Who is our enemy? Is it Alqaeda or the Mahdi army? The sad answer is that we just don't know.So we will continue to spill blood and treasury for what exactly? I'm still looking for an answer.

Sunday, April 20, 2008

McCain, the Retired Military "Analysts" and the Myth of al-Qaeda in Iraq
I am quoted in this NYT piece today on John McCain's allegations that the US is fighting "al-Qaeda" in Iraq and that there is a danger of "al-Qaeda" taking over the country if the US leaves.Those allegations don't make any sense. McCain contradicts himself because he sometimes warns that the Shiites or Iran will take over Iraq. He doesn't seem to realize that the US presided over the ascension to power in Iraq of pro-Iranian Shiite parties like Nuri al-Maliki's Islamic Mission Party and Abdul Aziz al-Hakim's Islamic Supreme Council of Iraq. So which is it? There is a danger that pro-Iranian Shiites will take over (which is anyway what we have engineered) or that al-Qaeda will? It is not as if they can coexist. Since the Shiites are 60 percent and by now well armed and trained, and since the Sunni Arabs are only 17 percent of the population and since only about 1 percent of them perhaps supports Salafi radicalism--how can the latter hope to take over?Even if McCain only means, as his campaign manager tried to suggest, that "al-Qaeda" could take over the Sunni Arab areas of Iraq, that doesn't make any sense either (McCain has actually alleged that al-Qaeda would take over the whole country.) The Salafi radicals have lost in al-Anbar Province. Diyala Province, one of the other three predominantly Sunni areas, is ruled by pro-Iranian Shiites. That leaves Salahuddin and Ninevah Provinces. Among the major military forces in Ninevah is the Kurdish Peshmerga, some of them integrated e.g. into the Mosul police force. Hint: The Kurds don't like "al-Qaeda", i.e. Salafi radicalism. Jalal Talabani is a socialist.

Friday, April 18, 2008

Suicide Bombings

This Robin Wright piece is courtesy of Juan Cole:

Robin Wright at WaPo writes that "Suicide bombers conducted 658 attacks around the world last year, including 542 in US-occupied Afghanistan and Iraq . . ."
deeper in the article is this bit of information:

" Of 1,840 incidents in the past 25 years, more than 86 percent have occurred since 2001, and the highest annual numbers have occurred in the past four years. The sources who provided the data to The Washington Post asked that they not be identified because of the sensitivity of the tallies.
The data show more than 920 suicide bombings in Iraq and more than 260 in Afghanistan, including some that killed scores of U.S. troops. All occurred after the U.S. invasions of Afghanistan in 2001 and Iraq in 2003.
The exact number of U.S. casualties from the bombs in Iraq is classified "because it might show the effectiveness of the enemy's weapon," said Maj. Brad Leighton, a U.S. spokesman in Iraq. "They won't even give the number to me."
More than 3,420 Americans have died in at least 10 major suicide bombing incidents, beginning with the embassy bombing in Beirut, which killed 63 people, including 17 Americans, and injured more than 100. The bombing of the
U.S. Marine barracks in Beirut six months later killed 241 and still ranks as the largest loss of American military life in a single incident since the Battle of Iwo Jima in World War II.

We don't hear much of anything about any of this amongst all talk of "keeping us safe." Tell me, why are we in Iraq, I forgot.

Friday, April 11, 2008

Revisit South of the Border

A follow up to my March 9 post concerning Pemex and the Mexicamn energy situation courtesy of Dan Denning of the Daily Reckoning.

Pemex better start exploring for more oil in the Gulf of Mexico or its going to pump out all its reserves in less than ten years. Mexican President Felipe Calderon went on national television last night in Mexico and told his countrymen (in Spanish, we presume), "We have to act now because we're running out of time and out of oil."........

The trouble is that Mexico's government has been using the state oil company, Pemex, like a cash machine that never runs out. Pemex contributes 40% of the total tax revenues of Mexico's Federal Government. It's a resource of the people, for the people, and by geology. But you cannot print oil on a printing press. There is no such thing as "just in time" energy resources.

Sunday, April 6, 2008

A Jeremiad for the Reverend Jeremiah

By now we've all seen the 20-30 second loops of the Reverend Jeremiah Wright delivering pointed words in what could be termed "fire and brimstone" homilies. How dare he. We've seen these 30 second pieces played over and over and over again. I don't know Reverend Wright and to be honest I haven't heard or read the complete text of any of the sermons being highlighted. I don't know the context of these homilies. Frankly I just can't get all that worked up about this.

Some say that the Reverend was damning America.How could he and how could Obama just sit there.and not leave the church. Has anyone read the Book of Isaiah or Jeremiah anytime in the recent past. It might be a good idea. It's probably where the word jeremiad came from and that is exactly what the Reverend was delivering:

jer·e·mi·ad : a prolonged lamentation or complaint; also : a cautionary or angry harangue

A search on You Tube for "Jeremiah Wright" gives 1600+ results sorted by relevancy. It's amazing that on the first page not one of the first 20 results provides an unfiltered, unedited video of Wright's homiletics. My point here is not to necessarily defend Wright but simply to put this "issue" into a little context. I have follow up post coming related to Martin Luther King Jr. Imagine the press coverage that he would have today if he ended up delivering the sermon he was working on for upcoming Sunday the week he died. It was entitled, "Why America May Go to Hell"

Sunday, March 30, 2008


I've been meaning to post on this for a week or so bit got sidetracked by some business travel. There is plenty of buzz out that the Bush Administration is itching to press an attack on Iran before their term ends. This talk has picked up considerably since Admiral Fallon stepped down form his post as head of Centcom earlier this month.

The question needs to be continually asked--- WHY??? What annoys the hell out of me is the constant drumbeat of propaganda constantly spewed over the airwaves (TV and Radio) as well as the print media. Look I'm no fan of the midget Ahmadinejad-- but the American people need to have a fuller explanation of the rhetoric. How many times will Sean Hannity spout, " Ahmadinejad says he wants to wipe Israel off the map" ? As Paul Harvey used to say-here's the rest of the story.

Juan Cole does a great job everyday providing a Western audience insight into daily events in the greater Middle-East. It helps that he speaks the language.

"Israel must be wiped off the map," although some experts disputed the translation

Juan Cole: "Ahmadinejad made an analogy to Khomeini's determination and success in getting rid of the Shah's government, which Khomeini had said "must go" (az bain bayad berad). Then Ahmadinejad defined Zionism not as an Arabi-Israeli national struggle but as a Western plot to divide the world of Islam with Israel as the pivot of this plan.
"The phrase he then used as I read it is "The Imam said that this regime occupying Jerusalem (een rezhim-e ishghalgar-e qods) must [vanish from] the page of time (bayad az safheh-ye ruzgar mahv shavad)."
"Ahmadinejad was not making a threat, he was quoting a saying of Khomeini and urging that pro-Palestinian activists in Iran not give up hope-- that the occupation of Jerusalem was no more a continued inevitability than had been the hegemony of the Shah's government.
"Whatever this quotation from a decades-old speech of Khomeini may have meant, Ahmadinejad did not say that 'Israel must be wiped off the map' with the implication that phrase has of Nazi-style extermination of a people. He said that the occupation regime over Jerusalem must be erased from the page of time.
Leading the misinformation campaign, as it did on Iraq, was the New York Times. Jonathan Steele: "The New York Times, which was one of the first papers to misquote Mahmoud Ahmadinejad, came out on Sunday with a defensive piece attempting to justify its reporter's original "wiped off the map" translation.
The mis-translation originated with the Middle East Media Research Institute (MEMRI), located in Washington. MEMRI was founded in 1998 by Yigal Carmon along with Dr. Meyrav Wurmser. Carmon was a colonel in the IDF Intelligence from 1968-88, Acting head and adviser on Arab affairs, Civil Administration in Judea and Samaria, 1977-1982 and counterterrorism adviser to prime ministers Yitzhak Shamir and Yitzhak Rabin 1988-93.

Wednesday, March 12, 2008

Saddam & Al Qaida--- No Links

I know we've all been engrossed in the Elliot Spitzer disgrace(especially us living in the Albany area) but it seems like the recent Pentagon-sponsored report would generate more press coverage than it's currently getting . We're looking at 4000 dead Americans, 30,000 or so wounded, who knows how many dead Iraqi's, a couple million displaced and billions and billions of dollars just flushed down a toilet over the past couple years.Why? The Old Maid Geraldine Ferraro is getting more press right now than this story.

Exhaustive review finds no link between Saddam and al Qaida
By Warren P. Strobel McClatchy Newspapers

Posted on Monday, March 10, 2008

WASHINGTON — An exhaustive review of more than 600,000 Iraqi documents that were captured after the 2003 U.S. invasion has found no evidence that Saddam Hussein's regime had any operational links with Osama bin Laden's al Qaida terrorist network.
The Pentagon-sponsored study, scheduled for release later this week, did confirm that Saddam's regime provided some support to other terrorist groups, particularly in the Middle East, U.S. officials told McClatchy. However, his security services were directed primarily against Iraqi exiles, Shiite Muslims, Kurds and others he considered enemies of his regime...

We really need to have a national discussion and we need to have it soon. It probably won't happen in this election cycle,but we need to talk about --- the role of the American military be in the world today. Right now the the road to economic destruction for the US is assured with a continuation of the current course . We've been in Iraq for five years now and Senator McCain talks of a multi-generational commitment still. Afghanistan is getting worse by the month. Our debt-laden economy is on the rocks and crude oil is hitting $110 a barrel--Matt Simmons talks about $378 oil ( if prices stay sticky in the $100 range get ready for close to $5 gallon soon).

What are we doing?

It's sad to watch this--I feel like I'm watching a slow-motion car -wreck. The masses are still oblivious.

Sunday, March 9, 2008

South of the Border

Just got back from a glorious week in Cabo San Lucas. It was one of those weeks spent on the beach with very little contact with the outside world. I guess I missed quite a week in the financial markets. We'll now see how closely coupled Wall Street and Main Street are.

One thing for sure, Cabo is still experiencing huge growth. Developments were going up everywhere. Granted Cabo is a playground for the rather well to do ( and I guess that now includes the Spring-breakers) but to me there are some clouds gathering on the distant horizon . Ponder this tid-bit I came across in the 10 page mini-newspaper that was dropped off at our door in the mornings there.

Pemex profits decline, product imports increase

That's a headline that screamed at me as I drank my morning coffee. WOW--$105 a barrel crude oil and the Mexican National Oil Company lost a billion and a half dollars last year. When I asked some of the locals about the story they all assumed I was mistaken. No way my story was true--- remember Pemex is the major source of revenue for the Mexican Government and a tremendous amount of social spending is tied to this oil revenue. I have a suspicion that we will be hearing more about this in the not too distant future and I'm betting that the news South of the Border will not be good.

Pemex profits decline, product imports increase
Eric WatkinsSenior Correspondent
LOS ANGELES, Mar. 6 -- Petroleos Mexicanos saw a decline in profits during 2007, reporting a decrease of some 16.13 billion pesos ($1.51 billion) after posting a net profit of $4.26 billion in 2006, according to media reports.
El Financiero, citing company figures, said Pemex posted the loss even though its total sales increased 2.9% over 2006 and hit an all-time high of $110 billion in 2007.
Pemex explained the loss as due primarily to purchases of imports such as gasoline, natural gas, LPG, and petrochemicals—all of which came to $16.97 billion.
Pemex also paid $63.15 billion in taxes to the federal government, up 11.8% from its 2006 tax total. Before taxes, the company posted profits of $61.63 billion.
In its 2007 financial report, Pemex said imports of oil products increased to 494,000 b/d from 431,000 b/d. The main import was gasoline, with the amount rising to 307,700 b/d in 2007 from 204,700 b/d in 2006.
These imports were up because fuel demand was higher and domestic production lower. Production averaged 1.511 million b/d in 2007, a decline of 34,000 b/d from 2006.
By contrast, natural gas imports averaged 397 bcfd, down 12% from 2006, mainly as a result of higher domestic gas production—up 13.1% over 2006 at 6.058 bcfd on average.
The country's oil production in 2007, however, dropped 5.3% from 2006, to 3.082 million b/d, due to the decline of Cantarell, to deferred output because of Hurricane Dean, and to several bouts of cold weather during the year.
Exports of oil averaged 1.686 million b/d in 2007, down 5.9% from 2006. The value of oil and condensate exports hit $44.39 billion, as the average price of the Mexican mix on the international market was $61.60/bbl.
El Financiero, quoting Pemex, said the drop in production was partially offset by an increase in the extraction of superlight oil from the Tabasco "Activo Litoral" and record output from Ku-Maloob-Zaap field.
Pemex also attributed higher output from the Lankahuasa, Burgos, and Veracruz projects, and gas extraction from the Marine light crude and Ixtal-Manik projects in the Southwest Marine region and higher output from wells in the Northeast Marine region.

Tuesday, February 19, 2008

tip o my hat

I have to tip my hat to Black Swan on the Mish Comment board. For the uninitiated Mish brings it hard as far as economic issues go, and is worth a read every day. Mish believes we are heading into economic deflation. Trust me on this one nobody ( except Ron Paul) left in the Presidential race can offer any kind of opinion or analysis on this argument. It really is beyond their ability to analyze the situation. In truth, this is a tough issue, even for those in the game --- are we headed for inflation ala Weimar? How about a revisit of the 70's stagflation ? Or are we looking at a debt driven deflation? Honestly -- I don't know. I continue to be long gold and gold related shares. Please ---get out of debt. As Jim Sinclair say--"protect yourself--this is it"

Here is Black Swan's post unedited:

The cold war was a game of chicken to see who would go over the cliff first, while carrying with them the weight of military spending. Thanks to Ronald Reagan and the Muhajadin, the US won, right? After all, the US spends almost as much on defense as the rest of the world combined. We're still playing, but we can't find any country stupid enough to play against us. Are we still winning? This Bushco economic strategy doesn't seem to be working all that well for America in this era of world trade. Our record account deficit illustrates how successful this country has been at producing what the rest of the world wants in trade. The only thing we've been adroit at exporting lately, has been our debt. I'm guessing foreign banks have probably had enough of our financially engineered instruments. After all, multibillion dollar write-downs can be embarrassing. We could sell more of our infrastructure to pay our debt, but it's too late to sell the White House, because the Saudi Arabians already own it.
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Sunday, February 17, 2008

Surge Nonsense

As we get into the meat of the political campaign season I bet we are going to be hearing more and more about THE SURGE. My Republican friends like to push the idea that "the surge is working". This is an argument that really does need exploration and not just in the superficial way that many of these issues are dicsussed.

I found a couple interesting pieces this weekend on Juan Cole's blog. This article by Patrick Cockburn is exactly what I'm talking about when I say we need to get beyond the superficial. A few highlights:

To judge from the talk in Washington, the 'surge' that put 30,000 more US troops on the ground in Iraq has succeeded in bringing stability to a nation still riven by ethnic, religious and tribal conflict. Life, the Pentagon boasts, is returning to normal. But the truth is a very different story.

In contrast to the spurious turning-points of the past, the most recent political changes in Iraq, which had led to the fall in American and Iraqi casualties, are quite real. But they differ significantly from the way in which they are portrayed in the outside world, and have less to do with al-Qa'ida and the US than the continuing struggle for power between Sunni and Shia in Iraq.
From the fall of Saddam Hussein in 2003 to the summer of 2006, the five million-strong Sunni community had battled the US and the Shia-Kurdish Iraqi government. Then, quite suddenly, last year many of the Sunni rebel groups switched sides and allied themselves with the Americans, formed the "al-Sahwa" or "Awakening" movement and declared war on al-Qa'ida.

"The problem in Iraq is that the agenda is driven not by what is really happening, but by the perception in America of what is happening," Ahmad Chalabi, veteran of the opposition to Saddam and one of the most astute observers of the Iraqi scene, told me. A problem is that US politicians and commentators assume far greater American control of events in Iraq than is the case. The US is the most powerful player there, but it is by no means the only one.

While I'm on the subject of Baghdad, I don't think any of us can really comprehend the situation. Wow!!!