Archive for May 22, 2008

Forty Seven Minutes That Will Expand Your Mind

May 22, 2008

I happened to take my own advice and read the Comments that people left over at the blog of Ambrose Evans-Pritchard.

One of them pointed to this Google video [update: Now a YouTube video]:

Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its “Duncan Initiative” received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

Now wait a minute there. Stop rolling your eyes.

Let me flashback about ten or so years ago. In the aftermath of witnessing an NYPD event, I fell into conversation with a neighboring witness. It was a glorious conversation that went on for over an hour. He tried to get into my head the importance of money and how we’ve all been fooled about it. I tried to get into his mind how nanotechnology will someday make money irrelevant. He thought I was frikkin nuts. After he mentioned his past peyote use, I then thought he was frikkin nuts.

Seeing the way the world has been going, he probably had the more realistic point. Nanotechnology is still (too?) far away. Money is what we all have to deal with now.

This video was an absolute enlightenment to me. It will probably be that to you too.

I’ve always had a sneaking suspicion that things are not quite right in the world in terms of economics, and this video really does point to what it argues is the central cause.

I want all of you to know that I’ve heard portions of what it argues before. But those portions were just that: isolated pieces of a puzzle that never really showed the entire picture.

I think this video does.

It’s not at all complex. It’s engaging and, as I’ve said, enlightening.

There is one thing I want all of you to keep in the forefront of your mind while watching this: Follwers of Islam are prohibited from charging interest on loaned money.

Islamic Finance

Islamic finance has become the fastest-growing, most dynamic sector of global finance. Every Western-style financial product has its sharia, i.e. Islamic law, compliant instrument: microfinance, mortgages, oil and gas exploration, bridge building, even sponsorship of sporting events. Islamic finance is innovative, flexible, and potentially very profitable. “Operating in 70 countries with about $500bn in assets, it is poised to expand geometrically.” With more than one billion Muslims eager to support it, analysts project that this system will soon manage approximately 4 percent of the world economy, equivalent to $1 trillion in assets. Such figures explain the eagerness of Western banks to tap into sharia financial services. Citigroup, along with many other Western banking retailers, have opened Islamic branches in Muslim countries.

Emphasis added by me.

Now go watch this video:

Chronicles Of Depression 2.0: #108

May 22, 2008

They’re wrong about oil, by George

The present commodity and oil boom shows all the classic symptoms of a financial bubble, such as Japan in the 1980s, technology stocks in the 1990s and, most recently, housing and mortgages in the US. But surely, you will say, this commodity boom is different? Surely it is driven by profound and lasting changes in global supply and demand: China’s insatiable appetite for food and energy, geopolitical conflicts in the Middle East, the peaking of global oil reserves, droughts caused by global warming and so on. All these fundamental points are perfectly valid, but they tell us nothing about whether the oil price will soon jump to $200, stay at $130 or fall back to $60 next month.

To see that these “fundamentals” are all irrelevant, we have merely to ask which of them has changed in the past nine months. The answer is none. The oil markets didn’t suddenly discover China’s oil demand nine months ago so this cannot explain the doubling of prices since last August. In fact, China’s “insatiable” demand growth has decelerated. In 2004 it was consuming an extra 0.9 million barrels a day; in 2007 it was consuming just an extra 0.3 mbd. In the same period global demand growth has slowed from 3.6 mbd to 0.7 mbd. As a result, the increase in global demand growth is now well below last year’s increase of 0.8 mbd in non-Opec production, according to Mike Rothman, of ISI, a leading New York consulting group.

Why, then, are commodity prices still rising? The first point to note is that many no longer are. Rice, wheat and pork are 20 to 30 per cent cheaper than they were two months ago, when financial pundits identified Asian and African food riots as the first symptoms of a commodity “super-cycle” that would drive prices much higher. And the price of industrial commodities such as lead, zinc and nickel, supposedly in short supply a year ago, has now dropped by 40 to 60 per cent. In fact, most major commodity indices would already be in a downtrend were it not for the dominance of oil.

Emphasis added by me.

And:

The people who tell you that commodity prices today are driven by “economic fundamentals” are the same ones who said that house prices in Britain were rising because of land shortages. The amazing thing is that just months after losing hundreds of billions in the housing and mortgage bubbles, investors and governments around the world have reverted to the discredited fallacy that financial markets always reflect economic reality, instead of the boom-bust cycles and misconceptions that George Soros’s book vividly describes.

Ok, he’s the second voice — Ambrose Evans-Pricthard was the first — to state that these oil price increases are nothing but a bubble.

And yet neither one of them has yet written about the possible effects of that bubble popping.

It can’t be pretty.

Plus, it’s obvious that we have now entered an age where — more than ever — money is chasing the next Bubble. A bus driver(!) last night summed up the desires of some people with their search for the BBD — the Bigger and Better Deal.

Money has hopped from the Internet Bubble to the Real Estate Bubble to the Gold Bubble(?) to the Commodities Bubble to the Oil Bubble(?).

What happens when there’s no new Bubble to put that money into?

The Daily YahooMail Still Sucks Post #4

May 22, 2008

Shockingly, last evening and earlier today, it was working as it should.

No delays.

Now something has gone awry and doing Check Mail just churns and churns.

Done. Again just about thirty frikkin seconds.

Previously here:

The Daily YahooMail Still Sucks Post #3

The Daily YahooMail Still Sucks Post #2

The Daily YahooMail Still Sucks Post
I Accuse YahooMail Of Deliberate Delays
Is YahooMail EVER Going To Be Fixed?
YahooMail Is Still Screwed
YahooMail: Redefining Suck

I Am Surrounded By Assassins!

May 22, 2008

James Kendrick announces that Matthew Miller has posted his HTC Advantage X7510 review.

Wayne Schulz over at Gear Diary sees Kendrick’s hand and raises by linking to several reviews.

I wonder if Judie Lipsett realizes someone at her site is in cahoots with Kendrick?

Fienditry005
Kendrick: Hold it close to the screen! Taunt him! Taunt him!!!
Tofel: Squeeeeee!

Previously here:

The Asus e900 Crushes The HTC Advantage

What eChanges Will High Oil Prices Bring?

May 22, 2008

Investor Alert – The Most Unexpected Beneficiaries of Global Energy Crisis May be MySpace, YouTube, Facebook

With gasoline prices eating holes in the wallets of the world’s most vulnerable consumers – young people and single women – EnergyTechStocks.com anticipates that each of these social networking sites will be utilized in what will coalesce over time into a gigantic national (or even international) Internet-based carpooling network. Instead of reaching for the car keys, women and young people will reach first for their cell phones, blackberries or laptops to check whether someone is going where and when they need to go.

I think this is just ridiculous.

The immediate beneficiary I can see is a service like Twitter. Friends can group together into ad-hoc local networks with immediate querying capabilities. YouTube makes no frikkin sense. MySpace and Facebook are also out of the e-quation (I could not resist that pun; sue me).

The other big impact here aside from food prices and transport fees?

Printed books.

What happens when a hardcover book costs $40 to $50 because paper prices and transport costs have skyrocketed?

Sales will drop. Boy, will they drop!

This is why I constantly bang on the table for ebooks — and especially Apple’s entry into it to give it the same legitimacy Apple gave to downloaded music with the iPod.

This is why I constantly yell in a very undiplomatic way at writers to get the hell on the Net and have a real personal presence.

When most readers start buying their books via the Internet, they will begin to expect those authors to be on the Internet too!

When people attend a live play, they also expect to be able to see the performers exiting afterwards and attempt to get autographs and photos.

Writers: understand this now!

Printed books have been like movies. When a movie’s finished, no one expects to see the stars in the lobby afterwards.

eBooks will be like live plays. People will expect to see you online.

Gasoline On May 21, 2008

May 22, 2008

Yesterday’s date because that’s when I saw the price.

It’s now $4.31/gallon for Super.

It’s now $4.89/gallon for Diesel.

Previously here:

Gasoline On May 18, 2008
Gasoline On March 15, 2008
Oh. My. God.

Chronicles Of Depression 2.0: #107

May 22, 2008

One post with several oil stories.

Oil climbs to record above $135

BANGKOK, Thailand (AP) – Oil prices hit a record above $135 a barrel before falling back in Asia Thursday, with supply worries, rising global demand and a slumping dollar keeping crude futures on an upward track.

With gas and oil prices setting new records nearly every day, many analysts are beginning to wonder what might stop prices from rising. There are technical signals in the futures market, including price differences between near-term and longer-term contracts, that crude may soon fall. But with demand for oil growing in the developing world, and little end in sight to supply problems in producing countries such as Nigeria, few analysts are willing to call an end to crude’s rally.

“The sentiment in the market is very bullish at the moment,” said David Moore, commodity strategist with the Commonwealth Bank of Australia in Sydney. “The U.S. dollar was weaker last night, and also the U.S. EIA report showed an unexpected decline in U.S. commercial crude oil inventories, so there’s a combination of factors pushing the oil prices higher.”

Crude prices blew past $130 on Wednesday amid concerns about demand, supplies and a weaker dollar, and then they just kept going. The rise accelerated when the U.S. Energy Department’s Energy Information Administration said U.S. crude inventories fell by more than 5 million barrels last week. Analysts had expected a modest increase.

Emphasis added by me.

Many investors believe the dollar’s protracted decline over the past year has been the most significant factor behind oil’s rise from about $66 a barrel a year ago.

Hey there, Eeejit In Chief, thanks again for bankrupting us with your stupid, uncalled-for, and unnecessary war in Iraq.

‘Squawk Box’ Guest Warns of $12-15-a-Gallon Gas

Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 “Squawk Box”. He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem.

“[T]he prices that we’re paying at the pump today are, I think, going to be ‘the good old days,’ because others who watch this very closely forecast that we’re going to be hitting $12 and $15 per gallon,” Hirsch said. “And then, after that, when oil – world oil production goes into decline, we’re going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we’re not going to be able to get the fuel when we want it.”

Hirsch told the Business & Media Institute the $12-$15 a gallon wasn’t his prediction, but that he was citing Charles T. Maxwell, described as the “Dean of Oil Analysts” and the senior energy analyst at Weeden & Co. Still, Hirsch admitted the high price was inevitable in his view.

Emphasis added by me.

Maxwell is a believer in two things:

1) The Hubbert’s Peak Oil hypothesis

2) The intractability of human beings to change

That second item is my own conclusion, based on what he forecasts as the bleak future of industrialized societies.

I don’t know if this question has been asked by the oil companies themselves: Are they in the oil business or the energy business?

Western Union believed it was in the telegraph business, so spurned the advance of Alex G. Bell and his screwy device called a telephone. Had Western Union realized it was in the communications business, we’d probably have a very different Internet today (if any!).

Now let me scare the living shit out of you. In 2004, Maxwell wrote this:

For the period 1987 to 2003, the historical range of oil prices was approximately $10 to $40 per barrel, with an average of $20. For 2004 to 2010, the price range could be $30 to $60, with an average of $40. For 2011 to 2020, the range could be $50 to $100, with an average price of $70 per barrel.

In other words, he’s been low. We’re already past $100/barrel three years before he predicted. So could we then be looking at $20-$25/gallon gasoline?

Ambrose Evans-Pritchard, the smartest guy covering finance, chimes in with Oil’s perfect storm may blow over:

The perfect storm that has swept oil prices to $132 a barrel may subside over the coming months as rising crude supply from unexpected corners of the world finally comes on stream, just as the global economic downturn begins to bite.

That sounds like good news. However:

None of this has been enough to curb the buying frenzy this spring. Goldman Sachs has warned that prices could reach $200 in a final spike, and even the bears at Lehman Brothers say there may be enough momentum to keep the boom going until Christmas.

It is unclear whether hedge funds and investors piling into futures contracts have now become the driving force in a speculative bubble. The Bank of England said yesterday that they were not a factor.

Lehman’s latest report – Is it a Bubble? – says commodity index funds have exploded from $70bn (£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion’s share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said.

“We see many of the ingredients for a classic asset bubble,” said Edward Morse, Lehman’s oil expert.

This week has seen a dramatic surge in oil contracts dated as far forward as 2016. Futures have moved higher than the spot price, a rare event known as “contango”. This can cut both ways: either as a sign of an impending supply crunch years hence; or that the futures market has become unhinged from reality.

The U.S. government does not believe in Peak Oil. Every forecast I’ve seen quoted, from whichever agency has been put forward to cite its forecast, calls for oil production to increase with no shortages in sight. Now, remember this is the same government that gave us the Iraq war and wants to move research into foot and mouth disease onto the mainland. Feel reassured?

And who to believe about these record rising oil prices?

1) World demand outstripping supply?

2) New sensitivity to supply disruptions?

3) New sensitivity to refinery capacity?

4) New sensitivity to global stockpiles?

5) Greed greed greed?

Or all five?

If it’s, just right now during this year, nothing more than number five, we might end up wishing it was one through four! Because if this is a bubble, and nothing more than that, it’s going to burst. Just like all bubbles do.

And we’ve seen what has happened with the real estate bubble.

This could be far, far worse.

Stupid Alert!

May 22, 2008

AP: Foot-and-mouth plan used flawed study

The Bush administration relied on a flawed study to conclude that research on a highly infectious animal disease could safely be moved from an isolated island laboratory to sites on the mainland near livestock, congressional investigators concluded in findings obtained by The Associated Press.

The Homeland Security Department “does not have evidence” that foot-and-mouth disease research can be conducted on the U.S. mainland without significant risk of an animal epidemic, Congress’ Government Accountability Office said.

Officials from the GAO and the Homeland Security Department were expected to square off Thursday at a House Energy and Commerce Committee hearing. The administration isn’t backing down on its view that modern laboratories have the highest security to prevent an escape of the virus.

The one certainty in the debate that has divided the commercial livestock industry: making the wrong choice could bring on an economic catastrophe.

While the disease does not sicken humans, an outbreak on the U.S. mainland — avoided since 1929 — could lead to slaughter of millions of animals, a halt in U.S. livestock movements, a ban on exports and severe losses in the production of meat and milk.

Emphasis added by me.

Jay Cohen, an undersecretary of Homeland Security, said in his prepared testimony: “While there is always a risk of human error … the redundancies built into modern research laboratory designs and the latest biosecurity and containment systems … effectively minimizes these risks.”

Emphasis added by me.

Who is this guy? Here is his bio at the DHS website. Here’s the fast summary:

Department of Homeland Security, Under Secretary for Science and Technology, Jay M. Cohen is a native of New York. He was commissioned in 1968 as an ensign upon graduation from the United States Naval Academy. He holds a joint Ocean Engineering degree from Massachusetts Institute of Technology and Woods Hole Oceanographic Institution and Master of Science in Marine Engineering and Naval Architecture from MIT.

Do you see anything there pertaining to infectious diseases or epidemiology, for either human or animal vectors?

I damn well don’t! Nor is there any reference in the rest of his bio to anything that involves infectious diseases or epidemiology for either human or animal vectors!

So how does this guy become the key man on this issue? Is he simply a puppet? Who are the puppeteers?

On the other side:

“We found that DHS has not conducted or commissioned any study to determine whether FMD (foot-and-mouth disease) work can be done safely on the U.S. mainland,” according to testimony prepared for the committee by Nancy Kingsbury, the GAO’s managing director for applied research and methods.

I don’t know who she is, either. This is the GAO page that lists her. There is no bio.

Now between the two, right off I’m predisposed to the GAO’s position. Why not do the most cautious thing here?

Read about the foot and mouth disease outbreak that occurred in England just last year. The suspected point of origin? A nearby animal disease research laboratory!

Our farmers here are right to be skittish. Look at what happened in England during a 2001 outbreak.

Foot and Mouth Disease Scares England:

An outbreak of foot and mouth disease in the United Kingdom in the spring and summer of 2001 was caused by a different strain of the disease. That episode saw more than 2,000 cases of the disease in farms across the British countryside. Around seven million sheep and cattle were killed in a successful attempt to halt the disease outbreak.

How much more serious would it be here?

More from the news report:

The AP reported in April that a 1978 release of the virus into cattle holding pens on Plum Island triggered new safety procedures. While that incident was previously known, Homeland Security officials acknowledged there were other accidents at Plum Island.

The GAO report listed six other accidents between 1971 and 2004.

“These incidents involved human error, lack of proper maintenance, equipment failure and deviation from standard operating procedures,” the GAO said. “Many were not a function of the age of the facility or the lack of technology and could happen in any facility today.”

The investigators found that the United States only avoided international restrictions after the 1978 outbreak because it was confined to the island.

Let’s keep it on the damned island!

Cheap, But It Made Me Laugh

May 22, 2008

A little poll over at iSmashPhone:

Weather For Suicide

May 22, 2008

The rain is back.

The April showers waited until May.

And May feels like November.

The forecast is for clear skies, sunsunsun, and 70s for Friday, Saturday, Sunday.

Then some rain comes back.

I don’t know how people in places like Seattle put up with so much rain.

I’d go nuts. (OK then, nuttier.)