Why I fear for my beloved country, part zillion

Because we're losing the middle class.  And when it goes,we spiral down fast until we're at third world status.  Other countries have gone down the exact same path we're trodding, with dependable--bad--results.

Mexico in the 70's was building a middle class until it slashed spending on transportation, health care, and education.  Poof.  As an article from 2002 in the New York Times said:

The development of a middle class was a shining achievement of the Mexican revolution, said the historian Lorenzo Meyer. Incubated in a closed economy that was driven by state-owned monopolies, the middle class grew steadily from the 1920's to the 1970's. Faced with declining economic efficiency and a mounting public debt, successive presidents opened Mexico's protected economy, igniting an industrial revolution that turned the country into one of the world's leading exporters.
In an effort to reduce its external debt, the government simultaneously slashed spending for higher education, transportation and health care - all traditional pillars of middle-class life.  Found here.

Radiation

I really think that nuclear power has the potential to help man- and womankind by producing clean renewable power. Stuff like this, though, isn't helping.

For the first two days after the accident, the wind blew east from Fukushima towards monitoring stations on the US west coast; on the third day it blew south-west over the Japanese monitoring station at Takasaki, then swung east again. Each day, readings for iodine-131 at Sacramento in California, or at Takasaki, both suggested the same amount of iodine was coming out of Fukushima, says Wotawa: 1.2 to 1.3 × 1017 becquerels per day.

The agreement between the two "makes us confident that this is accurate", he says. So do similar readings at CTBT stations in Alaska, Hawaii and Montreal, Canada – readings at the latter, at least, show that the emissions have continued.

In the 10 days it burned, Chernobyl put out 1.76 × 1018 becquerels of iodine-131, which amounts to only 50 per cent more per day than has been calculated for Fukushima Daiichi. It is not yet clear how long emissions from the Japanese plant will continue.

Found at newscientist, here.

However, here in the states, we're safe, as can be seen using this handy map of radiation levels.

Actual Nuclear Scientist on Japanese Crisis: It's going to be OK + other linky goodness

An English teacher in Japan has a friend that's a real nuclear scientist from MIT. He has written up the most comprehensive, understandable post I've seen. It can be found here.

An excerpt:

The point is that the nuclear fuel has now been cooled down. Because the chain reaction has been stopped a long time ago, there is only very little residual heat being produced now. The large amount of cooling water that has been used is sufficient to take up that heat. Because it is a lot of water, the core does not produce sufficient heat any more to produce any significant pressure. Also, boric acid has been added to the seawater. Boric acid is “liquid control rod”. Whatever decay is still going on, the Boron will capture the neutrons and further speed up the cooling down of the core.

The plant came close to a core meltdown. Here is the worst-case scenario that was avoided: If the seawater could not have been used for treatment, the operators would have continued to vent the water steam to avoid pressure buildup. The third containment would then have been completely sealed to allow the core meltdown to happen without releasing radioactive material. After the meltdown, there would have been a waiting period for the intermediate radioactive materials to decay inside the reactor, and all radioactive particles to settle on a surface inside the containment. The cooling system would have been restored eventually, and the molten core cooled to a manageable temperature. The containment would have been cleaned up on the inside. Then a messy job of removing the molten core from the containment would have begun, packing the (now solid again) fuel bit by bit into transportation containers to be shipped to processing plants. Depending on the damage, the block of the plant would then either be repaired or dismantled.

A Korean (nuclear engineer?) has been posting on somethingawful.com. Here's one of his posts. He also states that the reactors will be safe, mostly.

An excerpt:

Without cooling water, the likely "worst case" will be the reactor pressure vessel (RPV) building up heat, which builds up pressure, which could cause a rupture of the vessel. The fuel rods will spill out radioactive contents, fires might break out, and the reactor is basically a lost cause.

And how does that affect the general populace in terms of radioactive dose?
-Not at all.

The Atlantic weighs in by comparing the Japanese nuclear crisis to Three Mile Island.

It's good to be really really rich; everyone else is out of luck.

The Disequilibria blog has a post up that neatly breaks down all of the income gains for the last 10 years or so.

They all went to the top .1% of earners. The top one tenth of one percent. They made great fistfuls of money.

The rest of us are poorer. This is why we're in a recession/rapidly shading to depression. No one has any money to buy anything but for a handful of aristocrats.

The blog Naked Capitalism has more, here, "58% of real income growth went to top 1% since 1976."

Someone really really rich gets it.

The great depression was ended by a class traitor. Franklin Delano Roosevelt came from one of the richest families in America. But, he caught polio as a youngish adult and couldn't walk. He could, however, drive. He drove everywhere, zigzagging across
America. He'd stop his car and talk to people on the road, just average citizens, and somehow learned what it was like to not live in the bubble of wealth. When he became president, he was not beholden to his family or his (extremely upper) class. Taxes on the rich went way up, laws to protect the poor were enacted.

We're back to the same class structure as existed just barely before the great depression--a huge amount of the wealth in the country is in the hands of just a tiny handful of people.

Here's how one person describes the inequality:

If we divide the wealth of the US into thirds, we find that the top one percent own a third, the next nine percent own another third, and the bottom ninety percent claim the rest. (Actually, these percentages, true a decade ago, are now out of date. The top one percent are now estimated to own between forty and fifty percent of the nation's wealth, more than the combined wealth of the bottom 95%.)

When half the wealth of the entire country is concentrated in a tiny percentage of the population it impoverishes the other 99%. One percent of the population simply cannot go out to dinner often enough to support restaurants, cannot go to the theatre enough to support the arts, cannot buy enough clothes to support clothing stores, and so on. The engine of our economy is the middle class. We know what happens when the middle class doesn't have enough money to spend because it's being hogged by a tiny handful of people, because it has happened before: it was called the Great Depression. Currently, the distribution of money betwixt and between the rich and poor is just about the same as it was in 1929. How fun.

Andy Grove, one of the founders of Intel and a genuine rich person understands the quandry we're in. Read about it here. I doubt that he'll run for public office, however.

Remember that last oil crisis? Summer of '08? When prices were so high?

Here's an explanation of how they pulled it off; notice that BP was one of the players.
Quote:

According to [Victor] Davis, the scam starts in 2000 with the formation of the ICE - the Intercontinental Exchange. The ICE - founded by Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Societe Generale - is an online commodities and futures marketplace that exists outside the US and operates free from the constraints of US laws.

After a Congressional investigation into energy trading in 2003, the ICE was found to be facilitating "round-trip" trades. This is where one firm sells energy to another, and then the second firm sells the same amount of energy back to the first company, at the same time and at the exact same price, as told by Davis.

No commodity ever changes hands

Quite shockingly no commodity ever changes hands, but the transactions still send a signal to the market, artificially boosting company revenue. Angry yet? There's more.

Because the trading is unregulated by Washington, its difficult to gauge the scale on which "round-trip" trading takes place.

But when DMS Energy were investigated by Congress, the company admitted that 80 percent of its trades in 2001 were round-trip trades. This means 80 percent of all trades in that year were false trades. Not a drop of oil changed hands, but the balance sheets showed increased revenue.

The idea is to hike up commodity prices. For example, according to Davis, after the ICE turned commodity trading into a "speculative casino game where pricing was notional and contracts could be sold by people who never produced a thing, to people who didn't need the things that were not produced", Goldman Sachs were able to triple the price of commodities in just five years.

ICE can create artificial shortages and drive speculative demand

The beauty (or rather the horror) of the scam outlined by Davis is that because they control the oil markets, the ICE can create artificial shortages and drive speculative demand in order to charge consumers an extra dollar per gallon of gas. And whereas this may not seem like much, this $1 soon becomes $50 billion A MONTH as global drivers consume 1.7 billion gallons of gas every single day.

Looks like BP should have plenty of cash on hand squirreled away somewhere.

It turns out we are living in a libertarian paradise. Cheers!

Regulations permit oil and gas industry to regulate itself. The Interior Department’s Minerals Management Service—the agency responsible for managing oil and gas resources on the Outer Continental Shelf and collecting royalties from companies—decided in 2005 that oil companies, rather than the government, were in the best position to determining their operations’ environmental impacts. This meant that there was no longer any need for an environmental impact analysis for deepwater drilling, though an earlier draft stated that such drilling experience was limited. In fact, MMS “repeatedly ignored warnings from government scientists about environmental risks in its push to approve energy exploration activities quickly, according to numerous documents and interviews.” And an interior general analysis even found that between 2005 and 2007 MMS officials let the oil industry to fill out their own inspection reports.

Got that? NO ENVIRONMENTAL IMPACT STATEMENT NEEDED FOR DEEPWATER DRILLING. BP cut every possible corner on that well, they had no safety plan if something went wrong, because the US Governmant apparently have all the copies of "Atlas Shrugged" checked out of their libraries. Here's proof -- ll dead, uninmaginable disaster in the Gulf of Mexico -- that perhaps a bit of oversight is a good thing. Let's think about this. If you're a rational human and you know your own very personal bonus depends on you saving money, and there is no regulation forcing you to, say, drill a safe well, well then why not maximize your personal wealth, plus looking good to your supervisors?

Environment? What's that? Something you see out the window?

Quote above, and many more environmental time bombs planted by the Bssh administration, found here.

A humerous interlude

Relief wells not as sure a thing as I hoped.

Turns out the rock around the well (yeah, that one leaking in the gulf) has a porosity of 30%.   That's going to make plugging it from the bottom much more difficult.  Oil until October-November.  Assuming they succeed in drilling the relief wells in a reasonable amount of time. 

Feeling good? Read this; you'll feel better, uh, worse.

Here's a lovely chart from here of peak oil production.  Notice the sharp downward swing.  We're in big trouble-- we are mining an unrenewable resource to live--but that should be obvious to everyone.

Not so great to be a client of Goldman Sachs.

The firm makes money over hand over fist, owns the Obama administration (Summers, Rubin, Bernanke, and Geithner--the entire financial Obama team--are Goldman  alumni.)

Clients of Goldman Sachs don't do so well.  By a long shot, in a rising market.  According to Bloomberg,

Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday.

What  else is there to say?  Goldman's only client is Goldman.  Stay away.

How long will that oil be spilling out of the Gulf?

Maybe for a very long time.

As far as I can tell, most estimates are based on an exponential decline (i.e., it will end relatively quickly), but it more probably looks like a hyperbolic decline--a fat tail long decline.

Read more than you want to know about it here.

So how much oil is actually spilling into the Gulf Coast?

Reading the most scientific reports that use the latest satellite data, it appears to be somewhere between 20,000 and 25,000 gal/day. That's a lot. The 5,000 gal/day number being knocked around the media appears to be BP spin--I'm guessing its the first shot across the bow of the American public to make us pay for this total screw-up by a company that should have known so much better.

But the Bush regime thought self-regulation was the way to go. BP self-regulated themselves to 11 people dead and unspeakable environmental damage. Who's going to pay for that damage? You and I, the American public, that's who. Anti-regulation really means privatizing the profits (they go to the company) and socializing the losses (that's us, the American people, who get stuck with the bill of cleaning up this mess.

And this mess could get much worse.

Profiting off tragedy

Considering the upcoming oil shortage, what shall we do?  What is obvious that I can't see?

For a start, what companies will suddenly be much more valuable, and which will be in dire straits, indeed?

Trains on the plus side. Most efficient way of moving stuff.

Oil companies?  They're evil, but as oil gets more expensive, they're the ones that will have it.  Same is true of natural gas producers.

I like the idea of tide electricity generators.  We need more of these.

Must look at historical data.

Sunday Morning Gloom

Those Businesses that created the mortgage bubble are buying distressed mortgages at a steep discount from banks (40% off, then essentially selling the underlying homes back to the homeowner, giving the homeowner about an 11% discount off the original mortgage price. I'm confused. The New York Times story is here.

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.

Read about it, in the Telegraph, here.

Reuters reports:

Budget shortfalls pose a direct threat to millions of U.S. jobs, many in the private sector, as state and local governments lay off workers and cut spending on contracts and other business services, a think tank said on Thursday.

State and local governments will have to raise taxes and cut spending in the current and next two fiscal years to cover shortfalls totaling $469 billion, according to an Economic Policy Institute report.

Most telling: According to the New York Times "some down-and-out Mexican families are scraping together what they can to support their unemployed loved ones in the United States."

It's overcast outside; the sky looks like cement. I'm going back to bed.

Bye bye brokerages

The Brazilian stock exchange is now allowing trading without using a brokerage; the trading allowed uses the awesomely cool algorithms that previously were only available through extremely expensive hedge funds. Wow. I'm trying to get my head around this.

Here's a bit of the Bloomberg article:

International algorithmic trading will allow investors to trade using computer programs though UBS without going through a brokerage, Switzerland’s biggest bank said in a press release. Zurich-based UBS began so-called direct market access in Brazil on July 2008, allowing stock traders to complete orders anonymously without going through a brokerage.

How to steal a mortgage.

Goldman Sachs has it all figured out.

First, buy up lots of mortgages, and bundle the mortgages into securities.

Second, get a friendly rating agency or two to give the bundled securities high high high high ratings.

Wait, maybe first-first is get your employess into the highest positions of power: Henry Paulson Jr. (Treasury Secretary under Bush, and former President of Goldman Sachs), Tim Geithner, (Treasury Secretary under Obama and former Goldman lobbyist); find many more here.

( ... many steps deteted here for readablility ... )

But, now, that housing prices have tumbled, wrest those houses from the poor homeowners who bought your exploding interest rate mortgages by refusing to let the homeowners know who is foreclosing on them. Wow.

From the article:

When she wrote to Paulson, however, lawyers for Goldman denied that it owned the Beckers' mortgages. So did Germany's Deutsche Bank, a trustee that was holding thousands of subprime mortgages Goldman had converted to bonds.

...

As the months dragged on, Fabos-Becker finally found a filing with the Securities and Exchange Commission confirming that Goldman had bought the mortgages. Then, when a lawyer for MTGLQ showed up at a June 2007 court hearing on the stock battle, U.S. District Judge William Alsup of the Northern District of California demanded to know the firm's relationship to Goldman, telling the attorney that he hates "spin."

The lawyer acknowledged that MTGLQ was a Goldman affiliate.

That was an understatement. MTGLQ, a limited partnership, is a wholly owned subsidiary of Goldman that's housed at the company's headquarters at 85 Broad Street in New York, public records show.

In July, after U.S. Bankruptcy Judge Roger Efremsky of the Northern District of California threatened to impose "significant sanctions" if the firm failed to complete a promised settlement with the Beckers, Goldman dropped its claims for $626,000, far more than the couple's original $356,000 in mortgages and $70,000 in missed payments. The firm gave the Beckers a new, 30-year mortgage at 5 percent interest.

That lowered their monthly payment to $1,900, less than half the maximum $4,000 a month their subprime loans could've demanded.

But it's even worse. Goldman, those clever fellows, created the conditions for the crash, bet that it would happen, and are now reaping the benefits.

From McClatchy, again,

At least as early as 2005, Goldman similarly began using swaps to limit its exposure to risky mortgages, the first of multiple strategies it would employ to reduce its subprime risk.

The company has closely guarded the details of most of its swaps trades, except for $20 billion in widely publicized contracts it purchased from AIG in 2005 and 2006 to cover mortgage defaults or ratings downgrades on subprime-related securities it offered offshore.

In December 2006, after "10 straight days of losses" in Goldman's mortgage business, Chief Financial Officer David Viniar called a meeting of mortgage traders and other key personnel, Goldman spokesman DuVally said.

Shortly after the meeting, he said, it was decided to reduce the firm's mortgage risk by selling off its inventory of bonds and betting against those classes of securities in secretive swaps markets.

I suggest you read the whole thing.

Naked Capitalism has an illuminating article up, as well.

Peak Oil, it's here, peeps.

The largest oil field in Mexico, Cantarell Field--the eight largest oil field in the world--has gone from over 2000 kb/day in 2004 to 588 kb/day as of July of this year. The production has crashed. Looks like the well will be dry by the end of next year. Why this is important is that Cantarell went from peak production to almost depleted in only five years. Help! For even more doom and gloom, 6 of the largest 18 oil fields are in Iran and Iraq; I seem to recall we've not been ingratiating ourselves to either of these countries lately.



For fun, above is a chart of historical and projected oil production, found here.
More from the above link:

According to the BP Statistical Review of World Energy, out of the 54 oil producing nations and regions in the world, only 14 are still increasing production. Alarmingly, 30 oil producing nations and regions are definitely past their peak output and the remaining 10 appear to have modestly declining production rates. Put another way, when weighted by production, ‘Peak Oil’ is already a grim reality in 61% of the oil producing world!

Happy walking, y'all.

Morality, Stupidity, Random People on Street Corners and Me.

I have had this curious feature, endlessly documented on this blog; my intelligence level has fluctuated for the last three-somewhat years. I'm trying to process this in a way that is at least slightly interesting.

Me, stupid--FUN FUN FUN. CONFIDENT CONFIDENT CONFIDENT, SMART SMART SMART (In my own head, subjectively. Objective results may differ). I have decided that there is an inverse proportion between how intelligent someone feels and how intelligent they are. This makes choosing US presidents and presidents of corporations somewhat problematic. Proof? Turn on the radio or media thingie of choice. Because, of course, confidence, which I have at least a bit of proof about, is inversely related to competence.

Me, stupid--not so sensitive; also great fun; me somewhat closer to my normal level of intelligence? On the way to the Dr's this morning, there was this girl, 20 something, with a sign at a street corner. Sign said "Victim of current Economic Downturn, anything would help. God Bless." I didn't have any change to give her. I'm haunted. If dumbbb, I wouldn't care. It's better to be stooopid.

Relief Is In Sight

Thank goodness for the cutting edge coverage at 'The Onion'!

I had thought that the mortgage meltdown with its seismically destructive ripples throughout the economy would have been enough to quell all the irrational exuberance. But the audacity of hope being what it is, requires that we seek out more advanced solutions.

Finally we have the pharmacological technology to target individual cheery people, so we will no longer have to rely on tsunamis, earthquakes, Republican candidates and financial catastrophes with all their attendant collateral damage.

But take these welcome tidings in stride, or you may need a dose yourself.