Monday, May 31, 2010

The Audacity of the Inexperienced, the Untested, and the Immature

I seem to be the only non-Democrat that does not hold Obama personally responsible for the GOM Horizon blow-out. That does not mean that I do not expect the Government to find its footing in short order, just that unreasonable expectations about how quickly forces and efforts can be brought to bear is endemic in our society.

That said, the BALANCE of what the non-Democrats have to say about Obama is SPOT ON (I think this is one of the most important political analysis' I have read).

Barack Obama -- a man who was as unprepared to be president as any man in our lifetime -- has over the last 16 months shown that he is overmatched by events.
The fact that a first term U.S. Senator with absolutely NO OTHER life success was elected president can be expressed in no better terms than my own "The MTVization of Politics". (Just kidding! I think its catchy... but as for being the best? I await our regular commenters crack at this.) BHO was not a self made millionaire (spare me on the "book") BHO never ran so much as a popsicle stand), pulling himself up by the boot straps and in the process showing Americans how its done. No, he is a lawyer, and a very bright one by all accounts, but being a "Constitutional Scholar" is almost the most hysterical oxymoron ever. Heck, if that works, I am going to promote myself to "Energy Scholar" or "Financial Markets Scholar"! (Sounds better than "analyst", doncha think?)

There is a good reason why America cannot address its dooming social spending programs, deficits, and energy policies. America is made of its people! A people that have been conditioned by strange forces into believing that something can be had for nothing, hard-work and effort have no account, frugality and modesty are obsolete, and human life is not worthy of respect (our solution for all problems and inconveniences? Bullets, bombs, abortions, more and more brutal "Justice" - all promulgated without a SHRED of thought for the "unintended consequences" nor any sort of "cost/benefit" analysis). It is disgustingly impressive how effectively TPTB have triangulated the people into a hodge-podge of hot button issues, allowing the extremes on either side to rule in concert as the 2 headed, one party system we all know and don't love.

Who elected/voted for BHO? Let's be BRUTALLY frank in this discussion. Was it the small business owner? The self made middle class millionaire living in flyover land? The family MAN living in a traditional household? NAFC.

Goldman Sachs' management is overwhelmingly Democrat - they went for Obama. The inner City (arguably the least productive regarding tax payments and the most costly in benefits)? 99% for BHO. Pro-Abortionists? 99% for BHO. Young people that have not supported a family, met a payroll, or a mortgage (for any length of time)? Overwhelmingly for Obama.

Don't like my analysis? TS (That is a "Tough Situation"). This is the Blogsphere, where NOTHING is sacred and where no subject - no matter how inconvenient, politically incorrect, or just plain sh*tty cannot be discussed without fear of reprisal. I read about the scientist that was working on the GOM problem was fired by the Government for some very non-P.C. writings on his website - that incident completely disabused me of the notion that anything intelligent will be done by the Government on that problem.

There's the way it is, and then there's the way you THINK it ought to be. The GOM is only the latest in a series of inconsistencies that our ELECTORATE, through their elected officials, has FUBAR. We, as a people have simply GOT to stop blaming others - even our elected officials... after all we elected them - and start taking responsibility. Not that this is a likely outcome at this moment... it is far more likely that it will be forced on us, but at least we can discuss it.

It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so. - Mark Twain
Obama's presidency is done; you can put a fork in it. He and Jimmy Carter will live forever in the speech circuit/book writing limbo of the folks that voted for them. This not a happy moment. I never held out much hope for BHO on issues like the social programs, the deficit, Fannie Mae et al. After all, he is a Liberal Democrat, he won, and to the victor go the spoils. I did hope that he might take a stab at reeling in the "empire", shrinking our military occupation forces around the world, and insist that the OTHER nations provide for their own security. What a joke! BHO's 2 biggest voting blocks, Feminists/Abortionists and Americans of African descent have no interest in reigning in the social programs but professed to be anti-empire. I guess not.

You can't get a little bit pregnant. The wars are bankrupting our nation and KILLING people while the P.C. crowd freaks out about Rand Paul. Well, "Me thinks THE MAN doth protest too much"... THE MAN being the the elitists populating Goldman Sachs, the U.S. Treasury, The Fed, and the current administration... it amazes me how these elites have so successfully tatooed the the racist moniker on the Tea Party folks while perpetuating the subgugation of people the world over. You see its ok to BOMB non-combatants and murder women and children, just don't point out what an abject failure the social programs have been in assimilating the inner city.

The GOM disaster is just one in a long line of challenges that our political system will fail.

Saturday, May 29, 2010

So Much For the "Top Kill"

BP's "Top Kill" hasn't worked out as advertised.

I am not an engineer, I just play one in the "Blogsphere"...

Just kidding.

No, I am not an engineer... but I have contacts in the energy industry that are... and to a man the story was the same - the only possible solution for this situation is the relief well being drilled as we speak... and that will not be ready for at least another 60 to 70 days at a minimum. Problem is, that is not guaranteed to work, either.

So, we are back to my "What If" scenario. What if TPTB cannot get this thing shut in for months or years?

For the BP haters... this could have happened to any major Oil company. The engineers on site made a series of bad decisions - that's what people do on occasion, they make bad decisions. Cops shoot innocent bystanders (bang!), juries send men to prison for life only to find out 30 years later the DNA does not match (oops!), physicians misdiagnose and surgeons leave sponges and spoons inside patients bodies (ouch!), car accidents (crash!), Chernobyl (boom!), unwanted pregnancies (how'd that happen?), bad marriages (love is blind... and marriage is an eye opener).... people make mistakes.

Where this goes from here is anyone's guess.

Friday, May 28, 2010

Obama Speaking (Almost) Candidly about U.S. Oil situation

I received an email from a reader with this Link. Skip the first 49 minutes and listen from that point for just a few minutes. That is the President of the United States acknowledging "Peak Oil"... just not in those words.


I am running out of love for the US$. The US$ has now gone vertical, as measured on the Dollar Index... assets that go vertical ALWAYS wind up like Wiyle E. Coyote (Super Genius)... they notice at some point that they missed the Road Runner and are standing on thin air.

10 year Treasury notes were one of my biggest positions (personally). No longer. I shortened the maturity's down to 1 to 3 years, and used some of the proceeds to reestablish positions in energy equities, which have been beaten to smitherines by the BP debacle. The risk is is that these companies really need to be discounted because they are environmental time bombs... I reserve the right to change my mind... but I think that U.S. energy companies in particular, and energy companies in general, are cheap (that does not mean that they could not get cheaper... I am NOTORIOUSLY early...) Some of these are trading back down near their March 2009 lows... here's your second chance... but only for "Risk" capital... if you don't have any of that, this is not for you. My bet is, this sector will look very cheap when we look back on it in a couple years.


I will be happy to take the "Over" on that trade. It will be a lot more than 500k bpd and it will last a lot longer than 2017.


Obama is taking a great deal of political heat for the Horizon blow out. It reminds me of the heat GWB took for Katrina. This is what our political beliefs and passions has been reduced to - "The Blame Game." It has to stop somewhere. I know a lot of folks that were and are FURIOUS at the Left and their media dogs for what they did to GWB over the Katrina story. "Two wrongs don't make 1 right". For the good of the country, it is time to stop this silliness. Obama did not cause or improperly handle the GOM leak. GWB did not cause or improperly handle the Katrina response. Sh*t, in fact, DOES HAPPEN.

Unless somebody has to be blamed so that someone else can benefit politically.

Wednesday, May 26, 2010

The End of Ultra-Deep Water Oil Production

The BP Horizon explosion and subsequent blowout in the Gulf of Mexico means the end of Ultra-Deep water Oil production - at least near the coasts of any of the industrialized, liberal democracies.

That is, to my mind, a given.

Now, what if TPTB - BP, The Coast Guard, the Military, the Federal Government et al - CANNOT shut the thing in? WHAT IF? I am not an environmental scientist, but it would seem to me that the GOM would be a biological dead-zone. It would also seem to me that the Oil industry (the ONLY industry in that region when you get right down to it... money comes into that industry and is then circulated through everybody else down wind) in that part of the country would take a significant hit along with all of the supporting cast around it.

(The level of economic ignorance displayed by the folks trying to take political advantage of this is fairly impressive. They began by publicly worrying about the fisherman and the restaurants... absent the oil industry there would be no fisherman nor restaurants as there would not be customer for thousands of miles for either group... the region would be as poor as Afghanistan... to say nothing of the fact that without the Oil production from the GOM the fuel for autos and transport fuel would be considerably less available for ALL of the U.S. It would be awfully cold this winter, too, as over 15% of U.S. Nat Gas production comes out of the Gulf.)

What would it mean to have 7 to 10 million gallons pouring into the Gulf every month, month in and month out, for the next several (or many) years? What if "Top Kill, Siphons, Top Hat's, relief wells, bombs, etc..." don't work? They might... but what if they do not?

Aside from the ecological disaster the other unknown consequences are fairly staggering when you think about them. I won't bore you... you don't need my help to think some bad things up.

I never thought deep water drilling was a terribly good idea. The simple fact is that the ultimately recovered Oil from these sights really was never worth the price of admission... all in I don't think deep water would supply more than 10 years worth of current world Oil consumption. Any rational risk/reward or cost/benefit analysis would come up short on that one.

The question is what are the political ramifications of this. Forget watching the candidates and office holders beat each other over the head with this... what will the reaction be from the "consumer" and/or the "voter"? Will all of this be forgotten when gasoline is $8 per gallon? Even if the GOM is a giant dead zone that smells like northern New Jersey did when I was a kid? Really? (BTW... Jersey does not smell anything like it used to... but back in the 60's and 70's it was pretty bad...)

Whatever the political reaction from the crew currently in power (in both parties) you can be sure it will NOT be a call for any shared sacrifice or a rational energy policy.... it will be a call to affix blame (this is NOT this administrations fault, nor GWB's, or Clinton's... every one of us that drives a car or drinks bottled water is in on this caper).

This is a hard one to put one's mind around... I need to noodle this a bit longer.

Tuesday, May 25, 2010


Received an email today from a reader.

MK said:

The US will probably push the age at which people receive social security benefits to 70 or later , that would take care of the so-called ponzi scheme. As far as Rand Paul is concerned, he is a crazy little punk and once people realize how deranged he is it will be over. People in Kentucky do not want to eliminate the Department of Agriculture. Yes, other government benefits will be cut as time passes because the money won't be there. when social security was first implemented in the 1930s, 65 was chosen as the age to receive benefits because most people didnt' live long past 65. But on the other had I don't think too many baby boomers are actually counting on government benefits to retire on.
My response:

Thank you for your email.

"So called Ponzi Scheme". It seems you are dismissing Social Security and Medicare as Ponzi Schemes while saying the cure for the Ponzi scheme is to STIFF the people that paid into the Ponzi Scheme by changing the rules by which you accepted their money.... Is that correct? If so, isn't that the definition of a Ponzi Scheme (no qualifying "so called" required)?

Of course the government is going to raise the age for the benefits! But not before confiscating the nearly $500k I have paid into the program during my working years (90% of my career I was self-employed and paid both employee and employer contributions) and distributing that money to people that did not pay in what they are taking out. What choice do they have? Lower the monthly cash payment or raise the age! Since we don't live forever... average age for a man is, what, 77.5? So they just stiffed me for 40%? That's not a "so called Ponzi scheme"... that's a JACK.

Rand Paul is a "crazy little punk"? And the people of Kentucky what? The man ran for the nomination against TPTB of the Republican party and WON. Get a grip. The man is the next junior Senator from Kentucky, and there will likely be 3 or 4 other Senator's raising their right hands next January that come from his political base.

As for Social Security and the average Life expectancy in 1935... Here is a link to the Wikipedia entry on what is commonly called "Social Security". Please read it! Your suppositions are ALL F&^%%ED UP! While it is true that Life expectancy at that time was lower than today, the percentage and the cap for the program have been moving steadily up to the point of crushing employment here in the U.S.!! The introduction of Medicare and health insurance in general did more to incite the explosion of health care costs than anything else that could have possibly been done. A doctor's fee for a non-complicated baby delivery in the year Medicare was enacted was about $35. Today it is about $4,000, over 100X while general inflation was 10X... Congratulations! Wanna see me do the same trick for college tuition and Sallie Mae? Home prices and Fannie Mae?

The fact of the matter is that the unintended consequences of ALL OF THESE PROGRAMS were a F&^*ing DISASTER for the U.S., and while the programs did benefit a small percentage of the population, they did so at the expense of everyone else while creating grossly outrageous expectations - expectations that will not be met under any circumstances. Worse, the moral hazard - not saving and providing for one's old age - created by the jag-offs that enacted all of these programs will find the jag-offs in question BLAMING the folks that resisted this drek in the first place!

Both the Left and the Right, the two-headed-single-party that has been ripping us off for several generations are TERRIFIED that they might lose their grip.

I ask you: Can Rand Paul be ANY WORSE than the jerks now running the train set? What have we got to lose??!!

Sunday, May 23, 2010

Its A Cold, Cruel World (Compilation)

I compiled the "Its a Cold, Cruel World" series into a single essay. The originals were published during the first week of March, 2010 and are complete with links to my sources - this essay is published without those links.

Without further ado....

Its a Cold, Cruel World

"Mutually Exclusive Events and/or Outcomes": any event or outcome that by definition precludes another event or outcome (this is my definition - if someone has a better one.... post in comments and I will edit).

There is a very good reason that our politics are failing us here in the U.S. and the West. Every single one of us (ok, that's an exaggeration) exploits the "sound bite" and ability to speak out of both sides of our mouths even when confronted with powerful facts contradicting our positions.

Allow me to point out some examples:

Peak Oil and Fossil Fuels -vs- Atmospheric Carbon Projections...

Well....... if we have limited Fossil Fuels (Carbon) to burn, then we cannot have unlimited Carbon entering the Atmosphere... now, can we? Yet ALL, YES ALL, of the climate change projections assume unlimited supplies of Fossil Fuels to burn - meanwhile EVERY peak oil doom prognosticator (besides me) I can find on the web always seem to mention fossil fuel depletion and climate change as 2 sides of the same coin. There is simply no Universe in which that makes sense.

Peak Oil will happen, so will Peak Coal and Peak Gas... and they will happen LONG before the earth has 1000 ppm of Carbon in the atmosphere. It will happen LONG before the earth has 500 ppm of Carbon in the Atmosphere. We are already at 383 ppm. I am not a climate scientist, and I am not denying climate change is quite possible and probably not a desired outcome (to say the least). What I AM saying is that obfuscating any FACTS or TRUTH does not help the debate - yet that is EXACTLY what I see going on here (probably a good strategy to gain funding or grants).

Economic Growth -vs- Pay-As-You-Go Social Programs (Social Security & Medicare)...

Many on the Left have caught onto the idea that "Future Growth is Not Possible". As properly defined I firmly agree with them (more on that definition in a future post). Well that means the end of any and all government sponsored Ponzi schemes, doesn't it? Meanwhile certain groups decry the U.S. military from enforcing US$ hegemony while scooping money out of the Washington troff with both hands (and feet). You can't get a little bit pregnant.

Economic Solutions to make things "Fair" -vs- Resource Depletion...

There is not a Socialist/Left web site that does not blow out of one side of its mouth that the argument that the world's 6.5 Billion people can all live like American's with our current resource consumption is complete Bull Sh*t (and that is absolutely true)... and then goes on to argue that all of the poor need a middle class existence to be happy or to make life fair. We can't have it both ways. If the physical resources are not there, why do people make that argument? For political gain. If everybody had a personal jet, there would not be a drop of oil left on the planet. Jets are an extreme example. What would happen (don't worry, it CANNOT happen) if every family of 4 on earth lived in a 4000 square foot McMansion and drove a SUV? Same outcome, only worse. There wouldn't be a square meter of ground for growing food - it would all be covered by houses and parking lots.

In 100 years ALL of the world's oil will be gone... nothing we do now will change that outcome - the question is can we and should we use government agents with GUNS to make life more fair? I mean, there will always be a surplus of goose stepping jag offs willing to beat and shoot you at a particular government's behest, no questions asked. History is replete with examples. Is that really what we want?

What I am getting at is this:

Be careful what you ask for, you may just get it.


You can't have it both ways, and it is very, very non-constructive to pretend or argue that we can.


IF... yes IF...

Guys and gals like me, Jimmy Kuntsler, Dmitri Orlov, Jeffrey Brown, Sharon Astyk, John Michael Greer, Robert Rapier, Gail Tverberg, Jay Hanson, Saif Lalani, Mike Shedlock and Web sites like LATOC, TheOilDrum, and EnergyBulletin, et al, are correct and we are in the beginning throws of energy decent... and that the painful contraction in the economy is at least partly due to this, as well as the end of credit expansion, and that this will continue over the next decade or 2 until we are essentially out of "common use" oil...


It makes no sense to extend unemployment benefits or the housing credit, or to enact another stimulus plan... people living in the West, particularly America and Europe need to accept what jobs there are - be they picking strawberries or shoveling snow; need to accept that they may need to live with roommates or family rather than by themselves in spacious and private homes or apartments; need to accept public transportation, walking, and car pooling, gardening, no health insurance etc... especially "health insurance". What would make you think that we can have free healthcare and free unlimited end of life care while going through the End of the Age of Oil? Does that make any sense whatsoever?

Many of the folks I mentioned have been publishing for years that this was in the cards. Yet when I read many of their posts (not all are guilty... Orlov and the MS have no problem telling you are going to be making some adjustments) and articles many continue to blame the (fill-in-the-blank) rather than tell their readers that, speaking in the Macro, we are all just better off getting used to the new environment. That would mean ending government programs that do nothing but delay the inevitable at GREAT expense.

Because IT is HAPPENING!! The level of denial from the folks that predicted this IN THE FIRST PLACE is really quite astounding. Continuing to rail against the "rich" or the Republicans or Wall Street or greedy CEO's as we see the Liberal Media and the Left doing... is silly. They are going to get wiped out, too! Here's why: All that money that folks "owe"? They ain't paying it back! And guess who they "owe" that money to? The "rich". Well, the "rich" are no longer "rich" if everybody defaults on the bonds the "rich" own. The new "rich" will be folks that own different assets than today's "rich" own, though we might argue what they might be or how much would be necessary to be classified as rich.

The decline in Oil imports that the U.S. has experienced over the last 3 years, about 2.5 million bpd, simply are not coming back. We have a serious problem in Nat Gas coming, and Oil imports are going to continue their inexorable decline. As a result, the economy is going to contract in "real terms". Period. There are going to be more people living in a home than has been the case in 40 or 50 years. Fewer people are going to have access to a car. More people are going to have to accept jobs that are not terribly rewarding, however you define that, and get over their resentments, and plenty of folks will have no job at all until they accept the new reality - which for many folks means taking whatever you can get.

Did I mention that sometime in the next year California is going to default and need a massive Federal bailout? And that Illinois and New York are right behind them?

These dots are right there for you to connect. It is my opinion that many big insiders, like Senators Bayh and Judd, are quitting and distancing themselves from the coming political conflagration. Actually, that's not correct... that is not an opinion… that is a fact - as was stated by both Senators when the announced their retirement.

No, you won't be able to tell which day "IT" happened. "IT" has already happened to millions of folks and many of them don't even know it. "IT" is here, and "IT" is going to grind its way through to each and every one of us. Fighting "IT" won't help any more than swimming away from a sinking ship a thousand miles from land... where you going, anyway?

If you have the resources this is the time to trade them for the things that will have value. If you don't have the resources, get used to the environment I mentioned above.

It is a cold, cruel world. And as it turns out, "Peak Credit" (the term coined by Mike Shedlock) is likely as big a problem in the West as "Peak Oil", and likely will be for another few years... we shall see just how correct folks like Me, Jeffrey Brown, Saif Lalani, Ken Deffeys et al have been with our export/import models soon enough - by the end of 2011, I should think.

Right now, while the "financial system" has been stabilized, it certainly has not been fixed. I am going to speak of the U.S. economy, for the most part, and its effects on the American people and the ROW. This is going to be a brutal, politically incorrect assessment of where the U.S. finds itself, and what the U.S. is going to be like post purge - because that's what's up, the U.S. is about to purge: major gastro-intestinal distress with a release coming from both ends.

How did we get here? Glad you asked. Sooooo.... here comes MY definition:

We got here because "WE" wanted to reconcile an unfair and unjust world with the fair and just G-d that our people were purported to believe in, but Who just seemed to be falling down on the job (otherwise why play G-D?). After all, as George Carlin famously quipped:

G-d is all knowing, all powerful, all seeing, and all wise... he just can't handle money. He always needs money!

Just kidding.

Anyway, since life was not fair, and we all agree that it is not, and we wanted to show what kind of society we were... the nice folks in the FDR administration came up with what we now know as Social Security et al (by et al I mean all of the myriad state and federal transfer payment programs). From the Wikipedia Social Security site:

U.S. Social Security is a social insurance program funded through dedicated payroll taxes called Federal Insurance Contributions Act (FICA). Tax deposits are formally entrusted to[3] the Federal Old-Age and Survivors Insurance Trust Fund, the Federal Disability Insurance Trust Fund, the Federal Hospital Insurance Trust Fund, or the Federal Supplementary Medical Insurance Trust Fund. The main part of the program is sometimes abbreviated OASDI (Old Age, Survivors, and Disability Insurance) or RSDI (Retirement, Survivors, and Disability Insurance). When initially signed into law by President Franklin D. Roosevelt in 1935 as part of his New Deal, the term Social Security covered unemployment insurance as well. The term, in everyday speech, is used to refer only to the benefits for retirement, disability, survivorship, and death, which are the four main benefits provided by traditional private-sector pension plans. In 2004 the U.S. Social Security system paid out almost $500 billion in benefits.[4] By dollars paid, the U.S. Social Security program is the largest government program in the world and the single greatest expenditure in the federal budget, with 20.8% for social security, compared to 20.5% for discretionary defense and 20.1% for Medicare/Medicaid.[5] Social Security is currently the largest social insurance program in the U.S., constituting 37% of government expenditure and 7% of the gross domestic product[6] and is currently estimated to keep roughly 40% of all Americans age 65 or older out of poverty.

You can read the above link yourself, you don't need me. You can see the years where the coverage was expanded, and the steady increase in the tax rate, and the expansion into healthcare in 1965, and the many adjustments to the system thereafter...

Now, superimpose the timeline in the above link over the Oil production and export/import timeline for the U.S. In 1935, the year Social Security was enacted, the U.S. was the world's largest exporter of Petroleum. In 30 years, 1965, when Medicare was enacted, the U.S. was only 5 YEARS from the peak of its production, and within an additional 35 years, imports of Oil into the U.S. were DOUBLE domestic production. In other words, in a time span LESS THAN A HUMAN LIFE Social Security went from enactment to insolvency and the U.S. went from the world's largest Oil exporter to largest Oil importer. When Social Security was enacted in 1935, the presumption was that the U.S. would be able to expand its Oil production forever - and that presumption has turned out to be quite wrong. There was also the presumption that Social Security benefits, and later Healthcare (Medicare) could continue growing at 2X or 3X the rate inflation or GDP - and that presumption has turned out quite wrong.

So here we are, its 2010 and Medicare and Social Security, 2 programs growing exponentially and that have entered their terminal apogee at the extreme NE quadrant of a quadratic table:

This is the graphical representation of "e". Conceptually, anything growing exponentially will grow to infinity, or have the slope of the line go vertical. Since Medicare and Social Security cannot GO vertical... well, we all know what has to happen.


Addicts have no idea about graphs, and slopes, and exponential functions... they only know that they need their fix - the government check in the mail, cheap oil to drive 40 miles each way to work, credit cards to assuage depression brought on by long commutes, expanding waste lines and boring love lives... by consuming sh*t we don't need and forcing us to work at jobs we hate to continue to do so, not to mention to pay off those student loans... and, boy! Was the Government ever successful at addicting millions of people to years and years of idle time funded by the demographic tail end of that graph...

So, here we are... with demographic time bombs going off all around us... otherwise known as California, Illinois, New York, the Federal Budget.... and crazy people educated well enough to know better insisting that the above sloped line is NOT true - pay no attention to that man behind the curtain! - none of us has any responsibility at all because all we have to do is tax the "rich"! AND mock people living in fly-over-land because they had the inability to see the simple logic that the elites know better...

Now the time has come... soon the check WON'T be in the mail... because the international bond market won't let Uncle Sam get to the post office (they're broke, too)... Soon... lunch won't be free, love won't be free (whoever said "free love" clearly had never been married and divorced), and healthcare certainly won't be free...

Americans will be forced to save money and live within their means! Can you believe THAT? We will actually question taking on 200k in debt for aLiberal Arts education! We will pack lunches, cook dinner at home, buy things second-hand, wear hand-me-downs, work until we die, and pay for our own mistakes with our own money. The first generation going through this won't like it one little bit, but those that come after won't know any other way. Some people will still get rich, and others will not. Some people will be good looking, while most will be as plain as Abe Lincoln. Some will live long, while others die young. We WILL get over the idea of trying to legislate LUCK away. Luck will always happen to a few, and not to the rest and we will give up trying to make life fair by hiring government thugs. People who call themselves "Liberals" or "Humanitarians" won't be much of either unless they can do it with their own money, but they won't have much money so that won't be an issue.

Old people that have no family and that have been relying on the government are in for an incredible experience - and not a positive one. Most recent college grads will be fortunate to find menial work having nothing to do with their training for pay that will leave them living on top of each other Manhattan style - but with none of the benefits of living in Manhattan. Each and every one of us will be forced to actually produce something/perform a service or go hungry. On a happy note, divorce lawyers will starve to death, along with Feminism…

The Great Recession and the Great Deflation are going to be bigger than Peak Oil for the near future, and they are going to humble Great and Small alike.

You see, the 17% "real unemployment" is not "real unemployment", either. To make accurate comparisons as Oil and energy become less and less available on a per capita basis is the real issue. (Here's something to think about... Oil consumption in kilocalorie terms per person, or per capita, in the U.S. is down about 5 or 6 % since 2005... more people, and less kilocalories....) we as a society have to start telling ourselves THE TRUTH. The 40 million folks over the age of 65 should not be excluded from the employment calculations because they sure as h*ll did not pay into the system what they are extracting (otherwise, we would have a surplus, right?), and they sure as h*ll are not producing members of society.

Same goes with young adults. People in college are an enormous consumption drag on our output. The entire college population that is not working should also be counted into the employment numbers.

There are a few other groups - prisoners, the disabled, welfare and food stamp recipients that are not employed et al, and when you add seniors and college students et al... the remaining producers and tax payers simply cannot support the government services these groups require by NOT WORKING! (Yes, you can argue that education is an investment, and in a large minority that is true... so we will have to discount for that portion - while once again subtracting for the 23 to 30 year olds that live on their parent's couch playing video games.) The non-working spouses of folks making a good living and NOT taking care of the home unassisted (those with domestic help and nannies) must also be added this number.

Unfortunately, and I want to say this gingerly and with respect… we would need to calculate all military personnel as well.

ALL, that's right, ALL of these folks are consuming from the tax pool or disposable earnings pool that the tax payers are paying into, and there are simply too many people drawing from the pool and not enough people paying into the pool... now add to this equation the fact that Oil subsidizes the efforts of those paying into the pool and reduces the requests from those drawing from the pool.

Up until this point we have had the international bond market to fund this absurd cluster f***, particularly China and Japan, but now it appears that they are choking on the paper, and the Federal Reserve has had to step in and monetize the debt. The good news, if you want to call it that, is that the deflation in non government debt has outpaced the printing presses, and will for some time to come. Still, the Administration is NOT making noises about "jacking the social security retirement age" just for the fun of it. They got some guys there (Volker) that can count, too.

Of course, these pools of tax dollars for social programs have the perverse effect of creating more and more dependent people, another exponential function to calculate (in Dr. Bartlett's famous speech he speaks of a local politician that says he grasps the "e" function, but does not believe that it applies on the local level... to which Dr. Bartlett amusingly replies: "Oh, great. We have a local politician that believes that the laws of Mathematics do not apply in Boulder County, Colorado... worse, he has a degree from this (Univ. of Col. Boulder) institution... how embarrassing!") Certain members of the political establishment can see clearly that Americans are addicted to Oil, but CANNOT seem to see that American's are addicted to unfunded and teetering "social programs" (free money).

In the end, "It's a Cold, Cruel World" and the world will make the adjustments for us because as I have said a GAZILLION times before: There is no macro solution to any of this. The mass of folks believing in, and addicted to (and hence unable to provide for themselves) these entitlements is just too f*&^%ing large to be overcome (thank you, FDR) politically. You can see this in the price of Gold, Oil, the employment situation et al...

Speaking of employment... all of the absurd regulatory overreach (as well as the not so absurd) will come apart in the near future. Sexual harassment policies, discrimination policies, government worker's unions, etc... were all creations of the age of cheap and abundant energy, along with a long list of social and political "isms". Feminism? Gone. Liberalism? Say good night, Gracie. The NAACP? Gay Rights? Who cares? We won't have any money to fund any of this stuff. In a resource constrained world nobody is going to care who you are sleeping with (especially if it simply cannot result in a pregnancy) or what you are angry about.

Liberal economic policies have blown their constituent's belief systems out of the water. By increasing the number of people receiving government assistance, whether it be for rent, heat, food, healthcare, etc... doesn't matter. The fact is that the exponential function applies to liberal economic policies the same way it applies to human populations or weeds in a building lot - if the number of "tax receivers", (those receiving NET government assistance - which means plenty of "tax payers" are really "net tax receivers") continues to rise steadily then by definition anyone with a calculator can apply the exponential function, determine when the slope goes vertical and the system fails. Pretty simple, really. EXCEPT... we are talking politics. The same folks that grasp ERoEI (Energy Returned on Energy Invested) go f*@&^ing deaf, dumb, and blind when "e" is applied to any of their core beliefs.

But the "Cold, Cruel World" doesn't give a good fart WHAT you believe. In fact, the only reason we are even having this debate is that these belief systems have caused the outcome that mathematics predicted with certainty would come to pass.

I read a lot of the writings from folks on the other side of the aisle around the blogsphere. Kuntsler has some amusing commentary about complexity in his most recent post, not all of it very consistent. I watch in fascination as MILLIONS of folks on the Left support a 2,000 page healthcare bill that recasts one of the largest and most complex systems in the history of mankind... EVEN THOUGH THEY HAVE NOT READ IT! Is that hysterical?!

I watched in morbid fascination the debate on going to War in Iraq. A nation that had just witnessed, and was appropriately appalled by the murder of 3,000 non-combatants on 9/11/01 was supporting the idea of dropping half-ton bombs on population centers!!

Sometimes I think I am the only normal person left.

Think of the "Green Revolution". Did it alleviate world hunger as promised? Of course not. Did it encourage an explosion of population (think Haiti) that only increases the number of people starving? I leave that to you.

Did the social programs in the U.S. alleviate the suffering they were charged with? Or did they only increase the number of people that will endure tremendous suffering in the future? If you answered no to the first question and yes to the second...

I want to emphasize a point I made earlier: Energy in general, and Oil in particular has MAGNIFIED, or LEVERAGED the ability of the productive members of our society to produce enough goods and services to have supported the non-productive. Please think about that. How "productive" will these people be in a world of declining energy availability? How would it be possible to confiscate enough of their production to satisfy the demands, given the fact that we are running enormous deficits to fund this cluster f***, of all of the "tax receivers"?

Tell me how that can be done.

Today's quote:

"You know the difference between a terrorist and a do-gooder? You can negotiate with a terrorist." - Unknown. Brilliant, but unknown...

Some have turned to free clinics. It’s just one indication that the health care crisis is really an economic crisis. And for the boomers it’s only going to get tougher, according to Harvard financial historian Niall Ferguson.

“If they’ve done their homework, then they’ll be afraid,” he said. “Very afraid.”

Ferguson says it won’t be easy to care for a generation with ailing bodies and many more years to live.

“The baby boomers have set us on a path towards a massive fiscal crisis,” he said. “Which is going to hit as the baby boomers retire.”

The recession, though devastating, will pass. But rising health care costs as boomers age may bring lasting harm to this generation’s financial well-being. By the time all boomers are 65, the senior population will have grown from 40 million now to about 72 million. Who will pay their medical bills?

“This thing is going to blow up,” said Ferguson, “because A: The number of retirees is about to zoom upwards just the way the number of teenagers once zoomed upwards in the ’50s, ’60s and ’70s; and B: Because the costs of these systems are completely out of control.”

The strain that the burden of caring for aging boomers will put on the health care system could overwhelm the economy.

If current trends continue, in 20 years almost a third of everything we spend on goods and services will be spent on medical care.

“The cost of health care for the elderly has been explosive,” said Ferguson. “And that is the crisis which seems to be the really big crisis lying ahead of us. We simply don’t have an answer as a society to the problem of a very large number of relatively unhealthy people who live into their 80s.”
And so it goes and will go and go and go until the mushroom cloud climbs over the horizon, blowing up what had been a noble experiment because a bunch of do-gooders really thought they could change the Facts of Life, or that there would never be an unintended consequence to their do-gooding, or that as long as you meant well its ok if you bring down the world's great Liberal Democracy...

Great nations are destroyed from within... by sloth, greed, unrestrained extravagance, arrogance, pride, boastfulness... of their people. They are not destroyed by their enemies nor by the frugal, modest, reasonable, and rational. Our foolhardy attempt to remove personal responsibility from the lives of our citizens and its celebration in our sh*t-for-brains media and pop culture has led us to this sorry state of affairs.

Doubt this? Let me ask you a few questions:

Was our society harmed by:

People starting businesses and employing people?
People saving their money and living within their means?
Parents providing for their children and making sacrifices to provide for themselves?

Not a shot.

Our society has come to this unhappy place because of the unholy alliance between a political elite that sold out the people mentioned above, pandering to those that did not or would not and expanding their numbers with the confiscated resources of the productive portion of society to the point that our financial system is unraveling.

I am sure to get ridiculous anecdotal data points about Ken Lay and Enron... or whoever. I could reply that Bernie Madoff was one of the New York Liberal elite's biggest financial contributors. But this is unimportant. All of us under the age of 60 have already been ripped off, the proceeds of the Ponzi scheme have already been distributed by the political elites, and there is no way to get it back - but the expectations remain.

"And therein lies the rub..."

The Guys With the Pens

"History is written by the victors" - Winston Churchill

The Folks with the Pens, the MSM, have been doing their best to stop the revolution within the Republican Party. The MSM, and their Leftist masters are TERRIFIED that the two-headed, one party system could come undone... and they simply cannot have that. For all of its blather, the Right has been just as complicit in this Cluster F**k as the Left.

Rand Paul IS a political novice. He does say the very things that let the MSM and our oppressors in the two-headed single party running the joint take his comments out of context and lambaste him for those with a 15 second attention span. You see, there are enough of the 15 second folks to undue almost any national candidate...

Note to MSM and the two-headed monster: Rand Paul is going to COAST into the U.S. Senate, this time with a cadre of like-minded Libertarians. My bet is these guys are not buyable by the same folks that bought and paid for the f***ing morons we currently are stuck with... and that is what is freaking TPTB right out of their skin.

Libertarians ARE NOT anarchists! We recognize that the government provides the very services that makes society inhabitable - law and order, defense, and property rights. Much of the rest of it is merely political payola. Of course, that is NOT how the folks benefitting from such government largess and waste and extortion are going to see it. That's why this is going to be such a nasty fight.

If you are a Libertarian, now is our moment. This election, and the 2012 presidential election, likely represent one of the last chances to make some good decisions before the International Bond Market makes them for us. This must occur not only at the national level, but at the state and local level as well. For better or worse, our best shot is INSIDE the Republican house. They lost their way and the apparatus is there for the taking. The Democrats are nothing but Socialist/Fascists in sheep's clothing - hiding behind their idea of Libertarianism: Abortion Rights. They have done an amazing job of duping their supporters; of course, so has the Right and the Mainstream Republicans. I look forward to kicking sand over both of their discorporate remains... if you Grok.

All of the items I have listed below are going to happen irrespective of what you or I want. Its time to do this of our OWN volition rather than at the point of a sword:

  1. End the "War on Drugs" at the state and federal level.
  2. End the extortion of money from the private sector to fund the lavish pension system of the public employees.
  3. Cut military spending and bring home the troops.
  4. Cut benefits of Social Security, Medicare, and eliminate most of the Federal Agencies (what have they done for us?). Reduce head count in government at all levels "by any means necessary".
  5. Cut the budgets for Law Enforcement, Fire, and Public Safety at the state and local level. It is axiomatic that we all want life to be perfect; it is time to do a cost/benefit analysis of what we are paying for and what we are getting... including all of the unintended consequences. This includes our embarrassment of a legal system.
  6. Enact Laws to reduce lobbyist influence.
  7. Accept less regulation in most instances, not more.
  8. Address the energy issue! Its the 800 pound Gorilla in the room!
Not to worry. I am not delusional. None of these things will come to pass until we are in a Greece-like crisis. The good news, I guess, is that that is not really that far off - and then all of the above, plus a whole lot more, WILL come to pass.

As I said. If you are a Libertarian, now is our time. If you are not... not to worry, you soon will be.


The biggest contributor to the tidal wave of change we are experiencing is the slow motion train wreck that is the American Energy Crisis. That the above is, in my opinion, ineluctable is supported by the fact that the U.S. has an annual budget deficit of 12% of GDP. If I throw in the State and Local budget deficits for this year that number rises to nearly 16% (give or take). Now consider that the the U.S. experienced "economic growth" of 3%... that means in the absence of deficit spending we would be looking at contraction of 13%? Yes, that's what it means... which would make the Great Depression look like a prom data - a prom date that gave us WWII and those lovely, goose stepping, lovers of humanity, Hitler & Co.

Well, U.S. Oil imports, with the possible exception of Canada (and it won't be much) are coming to an end this decade. No, ifs, ands, or buts. 9 million + bpd of Oil... POOF! Gone!

From Jeffrey Brown's comments on my previous post:

Some Simple Net Export Math

The simplistic Export Land Model (ELM) assumes an oil exporting country that hits peak production and then declines at 5%/year, with a 2.5% rate of increase in consumption, with consumption equal to 50% of production at peak production rate.

Instead of projecting net export volumes (and instead of discussing two exponential functions), an alternative, and simpler, way of portraying net export declines is to simply plot consumption as a percentage of production. When this number hits 100%, by definition the exporter transitions from net exporter status to net importer status.

In any case, at final peak Export Land was consuming 50% of production. At the end of year three, they were consuming 63% of production. Consumption, as a percentage of production, increased at 8%/year. So, 10 years after the peak, if we extrapolate the trend, they would be consuming 111% of production (the model shows them going to zero net oil exports in 9 years).

In 2005, Saudi Arabia consumed 18% of production. In 2008, they consumed 22% of production (EIA). Extrapolated out for 25 years (from 2005), in 2030, they would be consuming 104% of production (Sam Foucher’s modeling shows them approaching zero net oil exports between 2030 and 2035).

And of course, this presumably would work for ELM 2.0 (the observed tendency for developing countries like China & India, i.e., “Chindia,” to outbid developed countries for declining net oil exports).

Chindia’s combined net oil imports, as a percentage of (2005) top five net oil exports went from 19% in 2005 to 27% in 2008, a 12%/year rate of increase. Extrapolated out for 14 years (from 2005), to 2019, Chindia’s combined net imports would be 102% of (2005) top five net oil exports, i.e., 102% of combined net oil exports from Saudi Arabia, Russia, Norway, Iran and the UAE. If we take Sam's best case for the (2005) top five net oil exports, and if we extrapolate Chindi'a current rate of increase in net oil imports, we get the same answer (Chindia approaching 100% of top five net oil exports around 2018).
The rate of decline for U.S. Oil imports has been roughly .7% PER MONTH for about 4 years now, and that rate will likely accelerate for a few years in the middle of the bell chart to over 1.0% per month. THIS, along with the U.S. total debt picture, is why the economy is where it is - we are are only in year 4 of a 15 year process to ZERO IMPORTS OF OIL.

Look, I really feel for the people that are having their belief systems shattered like an 8 year old told by his older brother that Santa wasn't the guy leaving the toys under the tree - it sucks to be them. I fully understand that many of these people will die out before recognizing that their belief system was a farce... That has been going on since we crawled out of the primordial soup. For the most part, these people only matter because there are SO MANY of them, not because they are individually "people of consequence" (People of consequence GOT that way by not deluding themselves for very long...). But Nature bat's last. And Nature says: "No more U.S. Oil imports within a decade or so".

Saturday, May 22, 2010


Kurt Cobb has an excellent article posted at Scitizen about the REAL cause of the Oil disaster in the GOM. Although we might not always agree, I love Kurt's stuff. He is a thinking man.

The disgusting jockeying for political gain from the cluster f**k in the Gulf is merely further evidence that our political system simply cannot rise to this, or any other, challenge. "BP has a history of safety violations". (No Sh*t and WTF??!!) Of course they do! They have 140,000 full time employees that work with explosive, corrosive, flammable, combustable, etc.. materials. Does anybody really think that with all of those people and all of those moving parts there won't be any accidents/incidents? 30,000 to 40,000 Americans die on our highways each year, and another 250,000 experience catastrophic, life changing permanent injuries as a result of the USAGE of gasoline and diesel fuel... Where is the outrage about that?! It doesn't exist because there is little to no political gain to be had in addressing that.

Rational thought simply cannot withstand the MSM's endless propaganda. There is NO PERFECTLY SAFE WAY TO DRILL FOR OIL, especially deep deposits in very deep water. There is NO PERFECTLY SAFE WAY TO LAUNCH SPACE ROCKETS, either. BTW, I don't hear anybody trying to shut down AIR TRAVEL (or rail travel) every time a commercial passenger jet crash (or train crash) kills a couple hundred people.

Why not?

Because we ACCEPT this costs/risks as the cost of being alive and LIVING. So what's up in the GOM? Politics! The same lame-brains that will lament the loss of wildlife in this incident are more than complicit by driving their gasoline powered vehicle to a protest... killing a couple of animals on the road there.

I really think that drilling in deep water for very deep deposits is a bad idea. A REALLY bad idea (imagine that...a pro-Life, registered Republican thinks offshore drilling is not worth its consequences...). I am willing to endure the consequences of NOT DRILLING in those places. But if WE DO DRILL, let us not delude ourselves into thinking that ACCIDENTS/ERRORS IN HUMAN JUDGMENT will not occur.

They will.

Think about that when somebody proposes Nuclear as the alternative... and whenever you see some Leftie nit-wit climb behind the wheal of his/her hybrid gasoline/coal powered animal killing machine on their way to protest BP/Exxon/Chevron et al for destroying the environment and killing those poor sea birds...


I hade someone in the comments ask me what I thought about Buffet et al, and MMT (Modern Monetary Theory).

I have a great many thoughts on the issue, and I will be covering them in the very near future in great detail. For those of you unfamiliar with the concept here is a link that will get you started and will link you to several other sites should you wish to participate in the discussion.

If you don't wish to spend the time, here is a hint as to what I think about the odds for success of MMT in the Peak Oil era: I bought a family farm and have provisioned it with diverse livestock, large gardens, tools, weapons, stored food, fuel... this is not to say that I am am certain of ANY outcome, only that the probability for systemic trouble is high enough to motivate me to do this. I also have Life Insurance even though I have enjoyed robust health all of my life. I also contributed to my self-employed 401k last year should the system NOT fail.

I deal in probability theory - not "certainty theory" (as if there was such a thing). Those pretending to deal in "certainty" are likely not in touch with "reality". "No battle plan survives contact with the enemy." - Sun Tzu


The rate of decline of imports of Oil into the U.S. remains within the limits projected by ELM and other models. We are 1/3 through 2010, and imports are down 7% for the year to date period from last year's year to date period.

Obama, like every other U.S. president of the post U.S. peak of oil production era (1970), clearly intends to kick the can down the road, rather than tackle the greatest issue to face America since WWII. To me, he has abdicated his shot at becoming a great President.

Read the dates as to when fuel efficiency will happen. LOLOLOLOLOLOL!!! Yee HAA!

Sorry, that got away from me...

Oil imports in the later part of this decade will be sparse, deep water drilling may or may not be happening. We will be driving a great deal less, and the whole "Food delivery by truck model" will be challenged in the extreme. It is nice that the administration is recognizing that over the road trucking consumes 20% of transport fuel... that percentage will RISE, not fall, as the total availability of transport fuels continues to fall - irrespective of the "fuel efficiency" mandates. The only mandate that will work is mandating rail rather than road. The physic's of moving a 40,000 pound vehicle across country on rubber wheels engaging in friction with an asphalt surface and wind resistance will NOT be impressed by mandates...

We will get through this, but we won't be needing Jenny Craig or Weight Watchers at some point. Not to worry, the market will bring you great incentive to eat less.


Enjoy the Nat Gas glut of 2010. If the GOM disaster means anything, it means the end of that.

Thursday, May 20, 2010

"All I gotta do is act Naturally"

"They're gonna put me in the Senate.
They're gonna make a big star outa me!
They're gonna put me in the Senate...
and all I gotta do is - act Naturally!"

How conservative is he? The 47-year-old Paul - who trounced establishment candidate Trey Grayson in Kentucky's GOP Senate primary Tuesday - wants to abolish the federal departments of education, commerce and energy, as well as the income tax.
(Yea, I know. What a source! Anyway, work with me for a minute...)

Dear Dick (and the rest of the "True Believers", Left and Right):

That isn't "Conservative" talking. You "Conservatives" spend like Liberals, only you aren't nearly as much fun in the sack and are a bit too fond of bombing people. Rand Paul is a LIBERTARIAN using your apparatus against you. If folks like Rand Paul do NOT STOP your silly Federal spending THE INTERNATIONAL BOND MARKET WILL ("IBM")! And SOON. Federal Spending is coming in for a CRASH LANDING. Paul and his supporters want to at least take a shot at a CONTROLLED crash landing, while the rest of you mathematically challenged lawyers and "political scientists" (LOLOLOLOLOL!!) want to fly the plane directly into the side of a mountain at full speed.

Sorry, that got a way from me...

In any event, the ONLY way to save ourselves from the Federal Bureaucracies is to starve them out! To CUT their budget, the budget they use to enrich themselves with salaries and benefits unavailable to mortal Americans while torturing us endlessly. The U.S. Federal Budget Deficit for this year will exceed 10% of GDP, and likely will or come close to that for the next several years - after which time things will get REALLY, REALLY bad. (Note to you Lefties - if you guys try to "tax the rich" to close that gap, all you will succeed in doing is EXPANDING the deficit from 10% per year to 20% to 30% per year... at which point you will be changing out of the blue jeans and sneakers into BDU's and combat boots. This is a time to be very, very careful what you ask for -you might get it.)

What, exactly, has the Department of Energy accomplished since its formation after the last "Energy Crisis"? (Other then expand their budget?) How about the Dept. of Commerce? (Guffaw!) And the Department of Education? All they have done is succeeded in enslaving a generation of young people with student loans for many an education that could have been had at a public library for the price of a library card. While we are at it, lets disassemble the Federal Student Loan program (Sallie Mae).

The funding for Social Security, Medicare, Medicaid, the Military, otherwise known as the "Big Spenders" are going to be cut, and cut deeply, by the IBM, too. (Don't know who the IBM is? Those are the folks that are lending us the money to do the things we are doing. When they stop lending us the money, and they will, it is GAME OVER. They don't care if you are Capitalist Pig out to exploit the masses or Communist Pinko out to save the worker - that funding is coming to an end; and with it most of the American "Rich".)

Sorry, Dick Cheney. Rand's not too "Conservative" for you. He is too NUMERATE for you.

Wednesday, May 19, 2010

Gulf Of Mexico

BTW... A small milestone was reached here at the American Energy Crisis! Today was my 888th post (I like to celebrate these types of numbers rather than the deci-multiples...). 888 posts later and I am still not sure what motivates me... it certainly isn't the ad revenue...


It would appear that we have come to the end of the deep offshore Oil adventure. Maybe not right away, but maybe a lot sooner than many of us thought possible. What if... the "leak" is not resolved in a month, or a quarter, or a year?...

If you think regulatory oversight is lax in the U.S., Brazil, Mexico, Nigeria and the rest of the major offshore oil provinces leave much more to be desired. The U.S. is not the only country with the ability to cause/experience an environmental disaster.

I read with great interest Dmitri Orlov's excellent article "An American Chernobyl", and there is little doubt that the comparison is a fair one. So... what if "Drill, Baby, Drill" morphs into "Nuke, Baby, Nuke" (or some such silly slogan)? Are Nuclear plants the answer? Really? Even in some Banana Republic upwind of the U.S.? Are they OK in the U.S. but NOT in the Banana Republic?

I confess, I tend to think of "Safe Nuclear" the way I view "honest politician" - as the ultimate oxymoron. There is no such thing as a failure free system design for ANYTHING of this magnitude, and let's take it to its next logical step: are we going to nuclear power the entire world at an American level of consumption? If not (and of course not), how, and by whom, will it be determined who gets what? Think there might be some folks less than satisfied with the outcome? As in, if you think folks are angry about the way Oil wealth is distributed (think 9/11), then you must think something like this to be at least as significant - except there will be a great deal more fissionable material floating around to settle grievances with...

American style "Capitalism" (I use quotation marks because under no circumstance do we have free market capitalism operating within the American economy... I think it would be better described as "Corporate Fascism" with a gentlemen's agreement between the 2 major parties to call it something else) is as close to breaking down as at anytime since the 1930's. The end (or decline) of deepwater production (which will take a little longer than the end of exploration) might well be the last straw that breaks our back, indeed.

The fact is that an end to offshore Oil production and new Nuclear facilities might actually be a fortuitous development for future generations won't even be considered - the change in lifestyle for the current inhabitants is simply "non-negotiable", as someone famously once quiped. Still, in the end its the action, not the motivation for the action, that effects the outcome. And I should mention that our current political system and polarized players are uniquely incompatible with a reasonable discussion, let alone a solution.

Initially, I thought that the Horizon explosion would be just another hiccup. After 2 weeks, it appeared to be a big problem; after 4 weeks it now appears to be capable of what was once the unthinkable. Time will tell.


The Industrialized world's debt situation was just compromised rather briskly with the GOM oil spill/leak/explosion. The potential of this incident for unintended/unconsidered consequences is considerable. Rational comments are requested.

Sunday, May 16, 2010

The Goldman Tax

Goldman (Government) Sachs is hardly doing "God's Work", but they are working... us over, that is.

Wall Street is no longer what it once was and professes to be: A place that helps aggregate capital so that business can begin and expand - a service of great benefit to society. No, with 70% of the trading done by computer/algorithm there is no longer any "service" - just an ongoing Tony Soprano style extortion. These systems are not making the markets more efficient, not even a little bit. They are nothing but a "Tribute" collection point. Every $ these guys make in this fashion come DIRECTLY out the pocket of the Investing Public. This required no great expertise, technological breakthrough, no wonder drug... just a "Work Permit" from one of the "Right" universities and the POLITICAL LICENSE that comes with being a member of the elite - and POOF! The money comes rolling in, one "tic" at a time, BILLIONS and BILLIONS of times.

Admittedly, I run a fund and speculate in the markets. That's right - SPECULATE. I win some, and I lose some, and in doing so folks like me provide a price mechanism and liquidity - particularly in the commodity markets - that allow producers to sell the product forward, giving them the incentive to produce NOW. Goldman et al do NOT win some and lose some. They ONLY WIN, because they are the HOUSE, and they and their ilk (Goldman, Harvard & Co., JP Morgan, the U.S. Treasury (but I repeat myself, I already said Goldman) are so convinced of their superiority and so arrogant as to regard themselves doing "God's Work".

As Mark Rubio, Republican candidate for Florida's Governor said so succinctly:

Those people that went to the right schools believe we need a guardian class to tell us what to do.

Now they tell us they are doing us a favor by skimming a piece off of 70% of the trades occurring in the market place. Well-Gee-F*&^ing-Thanks.

BTW, Mr. Rubio, you are from Florida. According to the President (look at his appointment for the Supreme Court), Goldman (look where they recruit), and the rest of the Northeastern political establishment there are NO SMART PEOPLE in Florida, the South, the Midwest, or the West. None, Zero, Zip, Nada, Ugatz, Bupkiss. 303 MILION Americans, but the only people smart enough to serve on the High Court or work at Goldman Sachs comprise a yearly graduate pool of perhaps 7,000 people. Guess how many 150 + IQ people there are in a population of 300,000,000? MILLIONS. Are all 7,000 members of the aforementioned pool ALL 150+ in the IQ department? Doubtful.

Thanks G-d for the Bolgsphere. History, and political reporting, is written by the folks with the pens... and in our case that WAS the liberal Main-Stream-Media. It was the Blogsphere that collapsed their strangle hold, but not without a fight - witness a N.J. Court's ruling that Bloggers are NOT journalists. Really? WTF??!!

The Elite ruling establishment isn't going without a fight, but in the end there just isn't that much they can do about it. The internet let the shaving cream out of the can - even these Drek cannot stuff it back in.

Saturday, May 15, 2010

GOM Leak Hastens Peak Me Thinks

The magnitude of the consequences of the Horizon explosion and subsequent Oil leak in the Gulf of Mexico ("GOM") is really not to be underestimated.

I have been noodling this for the past couple of weeks. Initially I thought that these companies had contingency plans for just this sort of thing. Egh! Wrong! Thanks for playing.

The Horizon Incident will forever change the mentality of "Drill, Baby, Drill", at least as far as off shore drilling is concerned. For better or worse, Off Shore is where any significant Oil finds are left to be found. Geologists have covered nearly every square inch of land, and for the most part, there is nothing big, Oil wise that is Nat Gas is another story, left to be found On Shore.

This may or may not be the right thing or a good thing. I tend to think that in less than 1 lifetime from here, we will be essentially out of Liquid Petroleum, and in 20 years countries like the U.S. will be consuming only 25% or so of what we are now - so what is to be gained by pretending that we can solve our energy issues with "Drill, Baby, Drill"?

Oil has done a great deal of harm to humanity, and made life infinitely easier and more comfortable; a Faustian bargain if ever there was one. Industrialization has made it possible to mass produce goods and services as well as the assembly line murder of the Third Reich (kind of ironic that nuclear weapons have likely ended industrialized death manufacture.... well, for the most part).

This is likely the point that politics enters the Peak Oil thing with gusto. The slope of the decline in world Oil production could well be breathtaking if off shore exploration and production is hampered in ANY way. I cannot foresee a circumstance where this does not happen at some level.

More soon.

Wednesday, May 12, 2010

The U.S. Trade Deficit and Oil

The U.S. annual fiscal deficit topped 10% in 2009, and will do so in 2010 and 2011.

So how is it that the economy is only growing 3.5%? (and 2.5% of that is imputations, seasonal adjustments, and guesses.) What will happen to "growth" when budget deficits are stopped (they WILL BE stopped, although perhaps not by our political leaders... "it takes 2 to Tango", as the saying goes... the international bond market will - absolutely and positively - shut that down at some point, trees don't grow to the sky...)


As I said in my previous post, we all love it when someone agrees with our positions... even if it IS the Main Stream Media.

That doesn't mean one should be encouraged or affirmed by the folks that "Coal Guy" accused of not committing "an act of journalism in years". Take this drek from from the Associated Press.

The higher deficit is evidence of an improving economy. It shows demand is picking up in the United States following the recession, which had cut the trade gap last year to the lowest level in eight years.
While that concept might be accurate, it does not describe the current situation. Our trade deficit is nearly 100% OIL. The trade deficit will go up and down with the price (and volume available) of Oil. PERIOD.

This issue/risk is simply not being priced into the markets.


The Euro will not survive. No way. You have the crazy circumstance of a "Union" in which the parts each engage in insane fiscal policies, while the "Central Union" can only control monetary policy. Add to this Europe's moral hazards (their safety nets and social programs) which has put them at a tremendous competitive disadvantage vis a vi the ROW (the Left's answer? Use FORCE, read government thugs, to stop international trade. I wonder what history they have been reading... "if goods and services do not cross borders, armies will"). As Jimmy Rogers correctly pointed out, the Greek Bailout means that the Eurozone has effectively given up on the Euro, and that eventually means the end of the Eurozone itself.

Not to worry, though... the Obama administration is going to do the EXACT SAME THING with California. Sometime in Q4'10/Q1'11 the U.S. will have to bailout California.


"Those that do not know their history are condemned to repeat it."

The truly sad thing here is that as the social programs model fails, its supporters will decry that the problem was NOT ENOUGH of the poison that killed us. Sooner or later humanity WILL get back to the only model that has ever worked in the long term - personal responsibility, family, clan, community... the current model of enacting ever larger bureaucracies to administer the enforcement "make life fair" government intrusion will come to an end one way or another. How many people are murdered or imprisoned around the globe before we come back to that reality is the point we should be debating at this time - but that's not how it works, is it? The way it works is on display in Greece and at every union hall for the public employees here in the U.S.

Tuesday, May 11, 2010

"Postcards from the Edge"

Gold had a record close today. Don't know what it means, but it is certainly not cooperating with folks at Elliot Wave. That's OK with me, precious metals are one of my biggest holdings (unfortunately, I sold my paper metals 10% ago... nobody's perfect). My other largest holding, Treasury paper has also done well of late. This should not be the case, but it is at them moment. I had these to hedge the other... sometimes hedges don't work out as planned, and sometimes its to the good (though not usually).

Europe "creates" a $1T Euro fund... the U.S. had its own bailout funds... Me thinks this is not a solution. Me thinks this will blow up, and as I have said before... sometime before 2018 even if there is NO problem with Oil imports. At that point the U.S. public debt will be well over the 100% mark, and that does not include the Medicare and Social Security deficits that will really be coming to the fore at that time.

Although it does not mean anything, I like it when somebody out there agrees with me (don't we all?). IBD's Jed Graham thinks 2013 at the earliest and 2018 at the latest... I think that is a reasonable projection - provided that the rate of decline for Oil imports falls to ZERO and imports level out here. If the rate of decline continues at the current .7 to 1% per month... well, feel free to move that timeline up a bit.


I can't help but read stuff people link to me about the Oil well leak in the GOM. Every single special interest group, particularly those Left of center, are trying to make political hay out this in the worst way. I note with interest just how few Lefty bloggers and journalists have backgrounds as engineers and mechanics and geologists (as well as State Troopers, FBI agents, SWAT snipers... positions which I think should only be staffed by folks that graduated from the best university philosophy departments and it should be done so by use of a DRAFT. In fact, I would disqualify ANYBODY that WANTED to be in Law Enforcement, Prosecution, Regulation, Judiciary, etc... and, just as is done in the military, after the period of their initial "induction" I would discharge these philosophers back to civilian life. My bet is we will have a much better societal experience and far less pension liability... Anyway, its a nice thought).

But I digress...

If the world closed down its offshore rigs right now, we would lose over 25 million bpd of liquid petroleum production. Be careful what you ask for.... in an effort to eliminate environmental risks in the world's oceans you would instead "eliminate" a couple of billion human beings in the resulting wars, famines, and economic collapse. Me thinks the cure is somewhat worse than the disease.

Informed folks on both sides of the aisle know this, but that does not stop them from trying to make political gains in the seemly and unethical fashion.

Things break. Mechanical equipment fails, events uncontemplated unfold. For better or worse, we have painted ourselves into a corner and we must continue to explore and produce oil under the world's oceans, even IF we are smart enough to realize that we must find another way - that will take time. In the meantime, this is where we are. Note to the environmental Left: If you think things are bad NOW, just nationalize the offshore industry. Can you imagine how many leaks, explosions, spills, et... that would ensue if the government were running things off shore?

This is not to say that I don't think there are some legitimate environmental issues that simply must be addressed. The problem gets back to special interest groups and their efforts to massage an issue in every conceivable way in order to benefit politically.

Monday, May 10, 2010

Obama's Supreme Court Pick

Elena Kagan, Obama's Supreme Court Nominee, will be confirmed.

Knuckleheads on the Right continue to harm themselves by assailing people's sexuality. Kagan has led a very private life. What does her sexual orientation have to do with anything? None of her lover's are talking... so why is anybody else?

The real issue, to my mind, is that once again we have a Harvard/Yale/Columbia/Princeton Northeasterner being nominated to the Supreme Court. The fact that she was NOT a judge is only a plus. The fact that she has ZERO respect for the Constitution is a somewhat greater issue... still, she will be confirmed. But you never know. Elevation to Justice has sobered many others in the past, let us hope that will be the case again here.

Are there REALLY NO SMART PEOPLE from the South or the West? The High Court, if Kagan is nominated, will be comprised of 3 Jews and 6 Catholics, with nary a WASP in sight - and WASP's make up the largest segment of the population... and they used to run the joint... Sheash!

Or was this really just abortion balancing. Kind of like a modern day Missouri Compromise or Connecticut Compromise?

Our politics have never been so contentious. This pick was not one to make that situation any better.

Goldman's Perfect Quarter

Goldman Sachs just put up the perfect quarter. Not single day losing money trading for last quarter!

This is not a slap-on-the-back-well-done-Lads kind of moment.

It is statistically IMPOSSIBLE to achieve that record in a fair market where buyers and sellers are on equal footing and all parties are acting with the same knowledge.

“This is the first time we have reported zero trading loss days in a quarter,” Samuel Robinson, a Goldman Sachs spokesman, said in an e-mail today. “We believe it shows the strength of our customer franchise and risk management.”

Well, that's one way of looking at it... Talk about brass b*lls. This must end, or our democracy surely will.

And that's a Capitalist talking.

Sunday, May 9, 2010

MIlitary Spending Finally Getting Looked At

U.S. Secretary of Defense wants to cut the U.S. military budget. According to this LA Times article, the Secretary is seeking BIG cuts.

How big? 2 to 3%!


Forgive me not being overwhelmed with the Administration's foresight and actions taken to cut the U.S. budget deficit and avert disaster. The very programs and institutions we enacted to protect us: Our military, Social Security, Medicare, Fannie Mae et al, are the very institutions whose gluttonous consumption of capital, effort, and resources will eventually lead the U.S. to ruin. Talk about your unintended consequences.

AFTER, yes AFTER that happens... the Left will point its finger at the military expenditures and the Right will point to the social programs... and they will both be half right... and then the battle might really begin...

I had an interesting exchange with the an individual on one of the social networking sites recently. No one I had ever met; a young man that felt the need to take me to task regarding my blog (I had invited one of his friends to read my posts as another point of view regarding the Oil spill in the GOM). I would best describe him as an angry young man (and my guess is he would describe me as an idiot, scumbag, moron, capitalist pig), probably of university age, who had moved away from the U.S. and now resides in a "Socialist" country. When he mentioned resources "that rightfully belong to the State" I realized that I was dealing with a political viewpoint not often encountered by an American. I am getting slow in my old age; earlier in the exchange, when I mistakenly assumed he was a garden-variety-college-kid-socialist, I tried to get him to expound on his view of using government agents to enforce his world view on the population - I pointed out that throughout history ALL socialist regimes had enforcement arms filled with the worst society had to offer willing to do the bidding of the government - the KGB and the SS come to mind, and I pointed out that the TYPE of person working for these organizations exist in EVERY society and that the only thing preventing the FBI or the CIA from going SS is the U.S. Constitution... he wasn't having any. I got a ducking, half answer that led me to believe that this young man was ready to lead the Red Revolution... and that he was prepared to make life fair "by any means necessary".

How very disconcerting.

I am a capitalist and a libertarian, but a casual perusal of history points out a couple of common threads... one seems to be that it is not REAL DEPRIVATION that pisses people off so much as RELATIVE DEPRIVATION. That large income and wealth disparity, not people starving, is the catalyst for upheaval (which sort of sits with my world view that in the end its all about sex, not money per se. While money may not buy love, it sure can rent it for a while. I will leave that alone for now because it will surely piss people off, even though we all know that it is what it is). The young, American communist I was speaking with came from an economically challenged upbringing, and he is PISSED OFF. Yea, I know, correlation does not prove causation... but we are talking humanity here... and it doesn't take a PhD in psycho babble to take a reasonable stab at this one. We have had a TREMENDOUS expansion in the distance, or multiple, between our top 10% of wealth and the bottom 10%. No doubt about that one. The question should be what, if anything, should be done about it... not who are we going to kill to fix it. The late 18th Century French Aristocrats flunked that one.

I should imagine that it is quite possible for a handsome, well spoken, charismatic leader to emerge and bring us down this road again... after all, it has happened before.

Saturday, May 8, 2010

"The Omnivore's Delusion"

Most of us have read Stephan Pollack's excellent book, "The Omnivore's Dilemma".

I run a small, organic farm in Tennessee. This is my fifth growing season and I can tell from my experience that what I know now versus what I knew then is a gulf too wide to fathom. For small family, or organic farming, to be viable economically the price of food would have to rise dramatically (IMHO). Considering that 11% of American's are on food assistance, and another 10% are hanging on (off?) by a thread... well, I don't see that as the solution the people will find most appealing.

Of course, sometimes things don't go the way people might like.

More soon.

Friday, May 7, 2010

FOS part 3

I'm sorry. This has absolutely nothing to do with energy... but to exemplify how FOS we have become nothing, and I mean NOTHING, beats this:

A significant leader of the Christian Right, a crusader working for the Sex Police, gets caught with his hand in the cookie jar, knocking boots with a young man that he met on line at - wait for it...!

Actually, this guy came a long and pulled this stunt at a very convenient time... I needed some FOS material on the Right. The Left just leaves so much FOS out on the table it seems I pick on them... NOT TRUE!!

Dear Folks on the Left:

In addition to not supporting war and empire... Not every Republican gives a good fart who you are sleeping with, how much porn you surf (provided you don't do it at your government job), what your personal proclivities are... there are plenty of guys like me on this side of the aisle that don't think its anyone's business what goes on between consenting adults, PERIOD... and it is CERTAINLY not the government's business. Its a shame that the Republicans are stuck with folks that feel this way and want to intrude in your life... if the Libertarian party was even remotely viable, I'd be out of here like Vladimir.

Guys like this make pro-choice vegans look consistent.

Wednesday, May 5, 2010

No Good Deed Goes Unpunished

The Greeks are raising hell, and a hoard of criminals, to protest being rescued.

If life were fair and just, IF!, the Greeks would be out marching to thank the more productive parts of Europe for carrying them for so long... but that's not how it works, is it?

Greece's unions and social programs have DOOMED the country, and it will absolutely, positively default on its sworn promise to repay money it borrowed. In other words, the people supporting these groups and programs feel they are ENTITLED to STEAL money, effort, security, and resources from others. Does that sound so different from the agenda of WAR?

America's school teachers, firemen, police, etc... along with present day Social Security recipients and anybody else on the dole are doing the exact same thing here in the U.S. There is a REASON that the average non government working family has little to NO SAVINGS, will never have financial security, and the U.S. is sitting on a political powder keg of its own. Our government has confiscated the efforts of these people to satisfy the union government worker and those receiving benefits from the social programs! As a result, we have crazy people leaving car bombs in Times Square and flying planes into IRS buildings! WTF?! Our government, like Greece, needs to take the pressure off of the people that pay the bills - or you can expect this kind of miscreant behavior to increase in frequency and severity.

The U.S. needs to take are LONG, HARD look at Europe as it unravels, because that is the ultimate outcome here. The Eurozone will not survive the decade, and I question if it will survive the next couple of years. Boy, that didn't last long, now did it?

BTW, I harbor no illusions. There are simply too many true believers in the proverbial "free lunch" on this side of the Atlantic now, NONE of them holding any reasonable concept of economic reality. For years they have been looking to the economic model in Europe (and worse, Russia and China) with envy. It is impossible for them to accept that their lifetime belief system was a farce.

Yea, the EU (Germany) and the IMF might be able to hold Greece together without a "default" for a while. That's not a real fix under any circumstances. How much longer the balance of the PIIGS can hold it together remains to be seen.

The cure for too much debt is not more debt. The cure of a lack of production is not less production and more benefits. Greece's citizens are not paying for what they receive, and that is going to come to an end irrespective of how many windows they break, how many cars they set a fire, how many people are injured or killed...

Take a good, hard look America. This is where FDR through Barney Frank/Barak Obama has left you, with a LOT OF HELP from George W. Bush (who I think is a very good person, but who spent money like a Liberal and put us into wars that very well could undo the U.S.). There isn't a shred of difference between the policies of GWB and BHO, which can be summed up as "Kick the Can Down the Road".

Tuesday, May 4, 2010

Peak FOS part 3

"The BP spill shapes lawmakers energy and climate discussion."

This would be funny if it wasn't so sad...

The price of retail gasoline is the ONLY thing that shapes lawmakers energy and climate discussions. Just wait till $5 gasoline shows up - then tell me how long before "drill, baby, drill" is back in favor.

We are a nation of Sybil's, Schitzoiding our way threw the dark with "Real House Wives of Orange County" and "Millionaire Match-Maker" playing in the back ground promising still more something for nothing to a generation that makes the "Me Generation" look positively selfless.

Look, it is what it is, and that's all that it is... but the idea that we are having an intelligent debate about ANYTHING other than here in the Blogsphere is just a circle-jerking-cluster-f**k.
At least the Blogsphere has decapitated Political Correctness.

So we go that going for us...

Monday, May 3, 2010

FOS part 2

The "Disaster" in the Gulf of Mexico ("GOM") has served up an opportunity for the FOS to get out in earnest and stink up the internet.

Yes, its bad. Really bad. But if you added up ALL of the spills, blowbacks, leaks, etc... in the history of the Oil industry, taken together they don't add up to the damage inflicted on the world in a week or 2 of automobile use.

Take the Exxon Valdez. The article says it killed "tens of thousands of seabirds, otters and seals along with 250 eagles and 22 killer whales".

Do you have any idea of the total roadkill per day on U.S. highways alone?

Oil is BAD STUFF. Oil let's us do fun/easier stuff.

100% of the incremental gain in daily production since the mid 1970's, 100%!, came from offshore production. If governments were insane enough to stop all off shore production, billions of people would starve in short order and the world plunged into chaos - simple as that.

We are between a rock and a hard place, but there is no question as to what is not going to happen. No matter what, the world is going to look for, and try to produce, Oil & Gas offshore, and sh*t happens. All those pundits telling you NOT to listen to us Peak Oil lunatics just assumed that technology will be able to solve the deep water issues; egh! wrong, thanks for playing!

Here are some plain truths for the FOS:

The folks that whined about this the loudest drove their car to work today, then to the gym, then to a protest... each of them killed a bird or 2, several toads, countless insects, snakes, lizards, your cat... and tomorrow they are going to do the same - they are FOS.

The various national governments around the world are going to continue to produce and explore offshore while giving voice to the knuckle headed jag offs mentioned above to continue to whine about ocean birds killed by Oil - they are FOS.

Vegetarians are going to order a bowl of oatmeal, with raisons and sugar... the machines necessary to raise their non-animal foods are going to kill thousands of rabbits, birds, foxes, groundhogs, mice, etc... that make their home in Oat, Wheat, or Corn fields, the trucks and trains that deliver their food are going to wrack up the road kill, as is the pollution emitted by these machines... but its all OK because these folks MEANT WELL. After indulging in a bowl of grains, berries, and skim milk, these mealy mouthed nit wits are going to DRIVE over to an abortion rights rally (after all, killing animals is inhumane; killing unborn children that might have been inconvenient is OK), kill a few more animals on the way (ever break down on a highway? Ever notice all of the smaller, dried up road kill? If you drive, you did this in between songs by the BeeGees and Snoop Dog... vegan or no), and then consume some bottled water - bottled in PLASTIC made from an offshore Oil well - these people are FOS.

In the end, the world will run out of Oil... and not all that far into the future, maybe a lifetime more or less - and that is NOT FOS.