Tuesday, June 29, 2010

More Unintended Consequences

"You never need an argument against the use of violence, you need an argument for it." - Noam Chomsky

That B.P. must survive in spite of their incredibly reckless behavior can be seen in the share prices of the other major international oil companies. The market now looks at Exxon et al as just another B.P. waiting to happen.

Think about this: Would you invest in a small petroleum E & P company given what just happened to B.P.'s valuation? Exxon et al are, for the most part, no longer in the exploration business, and will be less so from this point forward. Big Oil are really just large, publicly traded investment banks/private equity funds. They are in the business of ACQUIRING production and reserves.

But from who? Where is the capital going to come from to form these new, smaller E & P outfits?

The U.S. consumes roughly 19 million barrels per day of liquid fuels. Politically destroying domestic production, intended or not, WILL have consequences for our economy and national security to say nothing of our internal politics.

I do not suggest wild changes in policy, only a full disclosure to the American people and a sales campaign by TPTB exhorting us to accept the inevitable and to encourage people to find their way - but I have a better shot at a Pulitzer as a blogger.


Last week I posted that the Mad Scientist and I had gone net short in the U.S. equity markets, even going so far as closing most of our energy equity positions. The world's political leaders are now, finally, getting some religion in fiscal realities. If so, I would expect a nasty repricing of "risk" and fat whiff of deflation (but I reserve the right to change my mind if the data changes).


Less than 270 days until California needs a Federal bailout.


I love Noam Chomsky (see quote above). Not that I agree with some of his politics (what the hell is a "socialist-libertarian") but it is hard to look past some of his brilliant thoughts.

This morning I woke early as usual on the farm to get a start on the chores before the heat of the day. I came into a breakfast of eggs, sausage, potatoes and corn bread with preserves - all grown on the farm. Yes there was coffee and butter and honey (the butter and honey come from a guy I trade eggs for)... and these were not produced on the farm... but in the end this is just me expressing my politics - and there is simply no better way to express oneself than to sustain one's belief system by sustaining oneself... go that? I cannot say if I will always live like this, but it will be one hell of an adjustment if I had to give it up.

Monday, June 28, 2010

What I tell you?

Barak Obama says B.P. must not collapse.

What'd I tell you?

For many reasons, it is a good thing that Obama and his team came to recognize this now.

Sunday, June 27, 2010

Shipping Out

"If we don't believe in freedom of expression for people we despise, we don't believe in it at all." – Noam Chomsky

My oldest son left this afternoon for Europe. Like all parents, we were somewhat apprehensive about sending our offspring overseas... but to help put it into perspective I told his mother:

"Other families, even as we speak, are seeing their teenage sons off to wartime boot camp or deployment in a war zone."

We both paused and then said, "Thank G-d" simultaneously.

There is a good reason why I oppose our involvement in Iraq AND Afghanistan. I am unwilling to commit my sons to the risks of combat for these causes; it then follows that I am unwilling to commit your sons. Somebody really ought to give the folks in Washington a heads up. I have yet to see a funeral detail for the son of a U.S. Senator, Congressman, or Military Brass killed in action either of these countries (feel free to correct me). Coincidence? I think not.

I LOVE my country as it is/was Constituted. Its my government that concerns me. Fighting any War For Oil is a fools errand. BTW... I am a 6th generation registered Republican...

(One of the reasons I distrust political Special Interest Groups, even the "good" ones, is that they morph over time into something unrecognizable... Allow me to share some personal family history: My mother's family has lived in New York City for several hundred years with just about every group coming off the immigration boats in New York harbor winding up in my Gene pool. My Maternal Great-Grandmother's family were German Jews that emigrated from Alsace-Lorraine, and she was deeply involved in the suffrage movement, the pre-cursor to the feminist movement of today. She was the first woman to earn the rank of Detective, and worked for Teddy Roosevelt when he was the chief of New York's police. Her portrait hangs in the NYPD museum, her name: Adele Dittwieller. Her husband's family were abolitionists working on the "underground railroad" in 19th century Brooklyn. They must have been pretty serious about racial equality because his mother or grandmother was an escaped slave (He was Dutch/English/Native American/African). They were all REPUBLICANS; it was Republicans that began today's "Liberal" movement and founded papers like "The Nation" (The Nation was founded by Abolitionists, NOT Leftists). From my perspective it appears that people like my mother and grandmother splintered away from these roots over the issue of abortion (my mother was at one time the chairperson of New York's Right to Life party). Not all Republicans are the nose picking morons chronicled in the media, just as not every Democrat is mathematically and economically challenged, either. It just seems that way. It was only 40 odd years ago that the Deep South Segregationists were all DEMOCRATS. No Religious group or political special interest group remains static. They do not necessarily remain true to their founding principals. Somehow I think my ancestors would be appalled at what the Suffrage and Abolitionist movements have morphed into.

"At some point, the people's ability to pay runs out." N.J. Governor Chris Chrisite

Further, the state budget's are showing/giving the lie to how GDP is calculated. If retail sales are up, why are sales taxes down? Because the folks doing the counting work for the government (and they are here to help...snicker, snicker...).

Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP.
Hysterical, right? You can add state debt right onto the U.S. Federal budget deficit.


The economy hit a wall about 2 months ago. You can argue over what that wall is made of or why it happened or how long it might last. That it DID happen is not up for debate so much. Making money in this environment should take a back seat to capital preservation.

Friday, June 25, 2010

Today's quote:

"To me, it doesn't matter if your scapegoats are the Jews, the homosexuals, the male sex, the Masons, the Jesuits, the Welfare Parasites, the Power Elite, the female sex, the vegetarians, or the Communist Party. To the extent that you need a scapegoat, you simply have not got your brain programmed to work as an efficient problem-solving machine." – Robert Anton Wilson

I love that quote, even if it is only 99% accurate (I DESPISE political special interest groups - well, what can be done with a hardcore Libertarian?)

So let's engage our problem solving machine... but before I move on... Do you know what today is? Today is the 60th anniversary of the Korean War. Keep that in mind when thinking about Iraq and Afghanistan...

I was speaking with the Mad Scientist the other day. He had an interesting thought on the potential cause of the shipping and rail decline/bond yield curve/gold and silver:

Perhaps the CDS's backing B.P.'s bonds are causing fits with the banks - especially the European banks. He read my post about my thought that something bigger than AIG was in the offing and thought this was more likely than a default by Italy.

I thought that was one of the smarter thoughts someone shared with me in a while. There is simply no way that B.P. does not default on those bonds if the GOM Well cannot be capped (though I think B.P. will survive, MUST survive if Obama is survive and eventually his team will get that, that does not mean its stockholders or bondholders necessarily have to survive).

The number of guarantees and cross-guarnatees on CDS's of B.P.'s debt is just mind-boggling. Those banks are already very, very sick... In any event, it is a h*ll of a coincidence.

Thursday, June 24, 2010

BP Must Survive, even if the worst comes to pass

The BP Oil well leak in the GOM may never get capped say some of the more negative analysts.

Maybe that is true, maybe not. We will know soon enough.

It seems to me that certain folks associated with certain political ideologies are all too keen on killing a big Oil company. With BP so weakened, this looks like their moment. They may yet succeed with the help of the Tort Bar. But then I repeat myself.

Be very, very, very careful what you ask for. B.P.'s demise would, in my view, be the straw that wipes out the U.S. economy. Forget "energy security"; think economic security in the extreme. B.P.'s death, the death of the largest producer of Oil and Nat Gas in the U.S., at a time of declining imports means shortages, gas lines, steep market declines, worse unemployment... you get the idea.

The Obama administration will absolutely, positively not survive the death of B.P., and any moment now their political operatives are going to come around to that unpleasant truth.

The U.S. was saved by the bell in the form of 1 million bpd of ethanol that came out of nowhere like a White Knight and Nat Gas from the Shale formations, but those were "One Off's". Obama and his political team are keenly aware of Jimmy Carter's experience, but once a bullet leaves a gun it has no friends. Obama has already fired that bullet. It will be interesting to see just who that bullet hits.

Wednesday, June 23, 2010

Rail Cargo and the Euro

Back to the Rail Cargo cliff drop... I have been scouring the web for an explanation to the drop-dead fall in rail traffic. Nothing jumped out at me... (if anybody has anything good, please link)

Except the Euro.

The Euro was drifting down $1.50+ to $1.35 - and then screamed down to $1.18. It would appear that U.S. exports to Europe DIED... and with it rail traffic. Then....


If the data is correct, these indexes are pointing to an AIG style cluster f**k sometime this summer. Maybe bigger. No "maybe"... probably much bigger. One cannot compare a default by AIG with a default by, say.... Italy - a country with the 3rd largest public debt (behind the U.S. and Japan) where said debt is at least 115% of GDP.

I am not making a prediction about Italy per se, only that these indexes are discounting something very, very, very big... and something like an Italy default would fit the bill...

Given the Baltic Dy Index, Rail Traffic, the DECLINE in interest rates for Treasuries AND the recent record in Gold and near record for Silver in U.S.$ at a time where the US$ is RALLYING almost vertically??!!...

Something's up.

Stay tuned.

More on the States

Take a hard look at Michigan's municipalities - this is the future of most municipalities (by total population) for the rest of the states.

Regular commenter here at the AEC linked us to this Boston Herald link. State and municipal debt is close to $5 Trillion - and you can pretty much tack it right onto the Federal budget deficit because the Feds are going to be picking up the tab.

Worse, the very folks that perpetrated this madness continue to point their finger at everybody else. Let's face it, we got here as a result of the something-for-nothing folks that are, even as I write this, doing everything they can to undermine the financial system to bring on their vision of the perfect world.

Nice shot, guys.

Tuesday, June 22, 2010

Rail Cargo

My favorite prognostication tool - Cargo moving by rail - fell off the proverbial cliff over the past 50 days or so. Down like a rock in a pond.

Housing is dead. Retail already rolled over. I took most of my equity positions off the table over the past few days... even the energy equities. I am just too afraid of really, really bad news coming from B.P. and the G.O.M. It comes down to 2 relief wells being able to intersect the well BELOW the damage point. Though perhaps more likely than not, this is by no means a certainty.
Say, 60/40 in favor. What if its the 40%? What if the well cannot be intercepted?

Deflation appears to be gaining the upper hand for the medium term (it has been winning overwhelmingly in the short term).

This is not a market call. Markets can do weird stuff in the short term... but it pays to watch shipping.

Monday, June 21, 2010

We've Got Issues on top of Issues

The big states - Cal, NY, IL - are really in the soup. As I have said before, Cal will absolutely/positively need a federal bailout before the end of Q1 2011. NY and IL MIGHT, MIGHT, make it into 2012 before coming apart at the seems... and then again, they might not. Most of the rest of the states are pretty bad, too. This is NO TIME to be buying municipal bonds.

Local governments are in as bad, or worse, shape as Cal and NY. There is this sense that commercial real estate is the "next shoe to drop"... I think CRE is small potatoes next to what is going on in the state and local government budgets. I don't know exactly when this unwinds, but unwind it will. My bet is in less than 3 years (but I could be wrong).


No single lay off has to occur for any local or state government worker - instead of, say, laying off 25% of their workers the municipal unions could simply agree on a 25% wage and benefit cut. Of course, THERE ARE TOO MANY of these workers... and they are over paid and over benefitted when compared to workers in the private sector... the public worker's unions are just pulling the propaganda levers and placing stories with sympathetic journalists.

Propaganda (like imbalances) is EVERYWHERE. Public Relations firms' exist to help plant and spin stories in the media to suit their client's interests. There is NO INDEPENDENT journalism outside of the Blogsphere.


Anybody notice the strange coincident of nearly $80 per barrel Oil (front month), "high" inventories, and a "high" US$?


I always read Gene Logsdon. I also absolutely DESPISE the USDA which I think is Anti-Christ #2 (behind Goldman Sachs). The USDA is one of the most FOS organizations on the planet. I could rant and rave about these turds for hours, but if you don't work in Ag it would be lost on you... so I'll spare you. I will say to you that I have written to the USDA on occasion - to protest their silly assed, jag-off, know-nothing programs on National Animal Identification System (which has since be scrapped in all but name) and their lack of understanding the real risk to the country - and that is NOT crop prices and supports but WEATHER. These jokers think that as long as we don't "plow" irresponsibly "like we did in the '30's"... "every thing's gone be a'right".... these guys are as guilty of dereliction of duty as one can be. Our concentration and methods of AG production have left us horribly at risk to a significant weather outlier. Logsdon just touches on it... the floods that hit us in Nashville this year could just have easily been a multi year drought over the grain region... yet we have no "Strategic Grain Reserve".

Go figure.


I read with interest the stories about this past week's execution by firing squad in Utah. Who were the folks doing the shooting? They were VOLUNTEERS from local Law Enforcement. While it is no secret that I oppose the death penalty I am sure that the individual in question likely had worn out his welcome on this earth decades ago... but who the h*ll "volunteers" to shoot somebody? Do we want this type of person walking around with a gun and a badge? This guy,by his own account, was a murderous SOB.... and what kind of people are these "volunteers"? We warehoused this guy for over 25 years... we couldn't warehouse him couple more? We needed the $5 to $15 million in legal fees every death penalty case costs the taxpayer?

Back to those "volunteers"... WTF is up with them?

Just saying.

Thursday, June 17, 2010

Imbalances, like "Savoir-Faire", are EVERYWHERE!!

"If you want government to intervene domestically, you're a liberal. If you want government to intervene overseas, you're a conservative. If you want government to intervene everywhere, you're a moderate. If you don't want government to intervene anywhere, you're an extremist." – Joseph Sobran

Here you are, an American guy nearing 50. You have 2 parents, 1 sister, and 2 children. The government insists that you take care of your parents, so they confiscate Social Security and Medicare taxes from you. This is pay as you go, so there is not savings account, no trust fund... its just a transfer payment from you to your parents. Got it?

I am going to go out on a limb here... and assume that every taxpayer has or had 2 parents, most of who lived long enough to collect. I am sure you see where this is going, so I will get there quick. The government removed all incentive for most folks to save for their old age opting instead to seize money from the children to give to their parents. We NEED a government to do this? People would not take their parents in, or parents not take their children in? Parents would not have saved for their old age? Of course not, to the first question. Of course, to the next 2.

You and your sister will have to work for about 8 years of your 40 year work life in order to fund your OWN parents Social Security and Medicare consumption. Is there any wonder you cannot save any money? BTW, your parents are going to have a BALL, traveling the world on cruises, dancing the night away... baby sitting the grandkids? No way. Providing day care to the grandkids so that you and sis can work? Fat chance. Your parents put in their time, and now they are entitled to 30 years of leisure and consumption. Get your own damn day care! See you at Christmas dinner! BTW, can you cook? Grampa and I are leaving on the 26th for a cruise...

But wait! There's more! The government has set up a massive, bloated and overpaid bureaucracy to confiscate your money and transfer it to your parents, so for every $ you paid in these taxes, the government took 25 cents to pay those helpful folks at the IRS and the other agencies involved. And, say... if your parents are well to do, after they confiscate your assets and give it to the folks the government will take 55% off the top when the folks go to the big-transfer-payment-in-the-sky.

Agh... but if you call in the next 5 minutes we'll throw in an added bonus! A genuine accumulated deficit that will need to be paid back one way or another because we wanted to further over benefit in order to secure their votes but knew we had bled you dry with taxes already!

The government dismantled the extended family AND the nuclear family with its asinine transfer payment programs and Welfare programs and then completely f&**ed up the healthcare system with Medicare... but if you ask a "progressive" (a progressive is a person that studied humanities in college, completely skipping economics and mathematics, who then goes on to work on anything other than making a profit, meeting payroll, and employing people), all the problems in the modern world can be traced to Ronald Reagan.

The road to hell is indeed paved with good intentions.

Wednesday, June 16, 2010

"Liberty lies in the hearts of men and women. When it dies there, no constitution, no law, no court can save it." – Justice Learned Hand

In watching the president's speech from the Oval Office last night, I was struck by the shear politicizing of the GOM event. The president began a passage and had a moment where he really could have begun the marketing effort that only the presidency can accomplish. Here's the passage:

One of the lessons we've learned from this spill is that we need better regulations better safety standards, and better enforcement when it comes to offshore drilling. But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk. After all, oil is a finite resource. We consume more than 20% of the world's oil, but have less than 2% of the world's oil reserves. And that's part of the reason oil companies are drilling a mile beneath the surface of the ocean -- because we're running out of places to drill on land and in shallow water.

For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we have talked and talked about the need to end America's century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked - not only by oil industry lobbyists, but also by a lack of political courage and candor.

The consequences of our inaction are now in plain sight. Countries like China are investing in clean energy jobs and industries that should be here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil. And today, as we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude.
The pitch to the American people is that "We Can Do This" - with "This" meaning an Apollo moon shot style techno double achievement of "millions of clean energy jobs" and "clean energy". The sad truth of the matter is that the President might be able to convince legions of mathematically and scientifically challenged Americans that all we need to do is approach this the way we approached "putting a man on the moon" and Viola! Problem solved. We can all continue to live an an energy intensive society, and NOTHING could be further from the truth. Anybody with Physics 101 and 201 under their belt knows this (or about 2% of the population).

Yes, Mr. President we HAVE known for decades that this day is coming, and now that it is here you have chosen the political - "evil" B.P., Cap & Trade, "clean energy" jobs - over the substantive: Massive conservation efforts, massive expansion of heavy rail and public transport, and MASSIVE cuts in the budget for fuel for Federal Government vehicles and buildings. We SHOULD BE on a war footing on this issue, because the political ramifications
are as stark as War here on our soil.

There are positives, too, to bringing the American people together on a common course of action, because in addition to denying our oil predicament for decades... for DECADES our political leaders have polarized the electorate to the point we find ourselves at now - a hair trigger away from a political meltdown. But to do this you and our other "leaders" would have to cease your polarizing efforts and compromise, thus risking the strangle hold that the 2-headed-one-party has had on America since the end of WWII.

You blew it, Mr. President. The U.S. consumes closer to 25% than 20% of the world's oil. We DO only have 2% of the world's reserves. You LEFT OUT the FACT that the U.S. produces 8% of the world's oil on a current basis - which means the U.S. is running through its domestic reserves at 4X the rate the rest of the world is (all else being equal, and I know this is a less than perfect metric... but the POTUS brought it up) while the rate of decline in U.S. Oil imports is roughly .7% per month. How hard would it have been to put up a graphic, Ross Perot style, and walk the American people through this. The people PAID for the Hirsch Report. The people PAID for the Pentagon report on the future of Oil. Why not help the people to understand the issue? Heck, you are a former college professor... who better than you to make this presentation?

This is going to piss some folks off - don't read it if you are into denial. The American people are not only addicted to Oil - they are addicted to Media explanation. Pictures of birds drowning in Oil tug at the heart of any normal person. Pictures of flag-draped coffins coming off of military transport planes somehow do not. WTmotherfingF?!!! For some reason people cannot picture what is inside the coffin. Our media engages in censure in the abortion debate as well. Support abortion? Really? (Libertarians like me do not support the use of government force against women and doctors to prevent abortion. We prefer to work from the other side of the debate - prevention and assistance to pregnant women to prevent abortion) Ever seen a picture or film of the PRODUCT of an abortion? Probably not. No media representation of the REAL costs of war, no media representation of the REAL result of an abortion. No media representation of the Death Penalty, either. Why? I'll tell you why. You already know why. Because people are basically good and righteous and when confronted by the TRUTH of the violence of any of these they will reject them out of hand!! - And the 2-headed-one-party simply cannot have that. They must have control... and so we are manipulated with pictures of birds drowning in Oil while they withhold documentation of the human results of War, Abortion, and the Death Penalty. Why are we not permitted to see the graphic representation of the activities one purports to support? And why are people protesting BP in the GOM while we have teenagers coming home in pieces, placed in flag draped coffins, fighting over the very stuff BP was drilling for?

I have often wondered in this forum if I were, in fact, the only normal person left. Thankfully, I am NOT. I got a call from an old friend that I went to grade school with in the 1960's telling me that he is normal, too. Now there are 2 of us. I am looking for more. Let me know if you are out there.

Tuesday, June 15, 2010

The Wisdom of "Iron" Mike Tyson

"Everybody's got a plan 'till they get punched in the face." - Mike Tyson, former heavyweight boxing champion of the world.

To my mind, that pretty much sums up the U.S. energy policy to date. We have a "plan", and the "punch" is coming. The GOM was, perhaps, a "stiff jab", but it was no power-hand cross to the chin - at least not yet.

I await, with great anticipation, the President's communique from the Oval Office tonight.


The GOM represents 30% of the U.S. domestic production of Crude Oil, and 13% to 15% for Nat Gas. My bet is that the drilling ban will not be around for long (and of course, I could be wrong). My sense is that as imports continue to decline, the 500k bpd that will end up missing from domestic production in 2013 on would be just too painful to withstand politically - UNLESS the POTUS does an incredible job of communicating and selling the truth of our circumstances to the American people and having the American people accept responsibility. That, too, will require the cooperation of the various special interest groups that are hell bent on CONTROLLING people and compromising liberty... in short, I think we are F&(&^^ed.


Our lives have become one great, big child's symbol book. EVERYTHING is symbolism. Everything is STYLE, not a shred of substance. One cannot protest BP on FaceBook. One cannot even protest BP by buying another company's gasoline. Oil is a fungible market. Spit in the Ocean in California, and the sea levels rises in the Arctic. Same with Oil.

Wanna protest? Wanna Boycott? Park your car and walk. Not willing to do that? Shut up. Best to be quiet when you are nothing more than "Just Another F*%&ing Observer".


The decline in the Euro has serious implications for U.S. companies doing biz in the Euro zone - none of them good. Beware Tech - the earning will not be there are this exchange rate. Beware Financials, too. Housing is still sick, and commercial property is starting to cough up blood.

Monday, June 14, 2010

THe Keystone Cops in the Land of the Philistines

Watching the Obama Administration fumble and bumble their way through the last 18 months or so, culminating in the B.P. response (I do not hold them responsible for the Horizon incident in ANY way. The U.S. government is a monolith of unfathomable proportions; it might be large and powerful - but nimble? NAFC.)... well, I simply cringe as I watch the spectacle unfold... and while I do not hold the administration responsible for the spill OR the practical response... the POLITICAL response has been nothing short of mind boggling. BHO is no WJC. Not that B.P. is any better... B.P. and BHO's administration is a fantastic facsimile of one of the best comedic combo's in history - Abbot and Costello's "Who's On First" has nothing on these unfortunate dim wits.

The politics of energy had taken on a "down the rabbit hole" semblance before this... Now? To say it has taken a turn for the surreal is surely a comical use of understatement.

And then, just when you think the man was nothing but a befuddled mistake, he comes out with this:

"I have no idea what new energy sources are going to be available, what technologies might drive down the price of renewable energies," he said. "What we can predict is that the availability of fossil fuel is going to be diminishing; that it's going to get more expensive to recover; that there are going to be environmental costs that our children, ... our grandchildren and our great-grandchildren are going to have to bear."
WTF??!! That was the most cogent, concise, and lucid commentary to come from a public official, let alone the mealy mouthed divinations we are usually tortured with from sitting U.S. presidents.

Just goes to show you... a man lives long enough he's likely to see and hear just about everything. Too bad the administration cannot summon good sense like that at will.

Friday, June 11, 2010


My bet is that BP will survive. The company is just too important to the UK pension system, and is fairly important to various state pension systems here in the U.S.

This has been my position, but it is nice to see that others are recognizing the effects of demonizing a multi-national company of BP prominence. What's to stop another blow out in an Exxon or Chevron or Conoco well? Want to put them out of business, too?

Really? 90% of the world's Oil reserves are held by state owned Oil companies... Saudi Aramco et al. Look before you leap.

This is not recommendation to buy BP' stock. I said they would probably survive... I didn't say at what price.

I like Ag commodities, Farm Land, short term treasury paper and energy equities. Still have my precious metals... but that can go either way.

Thursday, June 10, 2010

More "What If" fun with Dick and Jane

Let us play a little more "What If". Let us play some mental chess, consider unintended consequences, do a cost/benefit analysis... you know, the kinds of things our government and the mainstream media NEVER do.


The U.S. has a 9.8% official unemployment rate. Anybody with any financial sophistication (that leaves out the media and the Sheeple) knows that the U6 rate, the REAL rate, is closer to 18%.

This administration, in an effort to survive into a second term, is willing to search for "an ass to kick". They cause B.P's liquidation. "Yay!" Says the Sheeple and the Left. "Yay! We killed one of th bad guys!" They prosecute a number of folks on the Horizon and in BP. They extend the drilling moratorium for 12 and then 24 months. 75,000 very high paying jobs in the oil services industry go kaput in the GOM region.

The rigs move to Asia, Africa, Russia, Brazil, et al...

The GOM is responsible for 15% to 18% of U.S. Nat Gas supplies, and a larger piece of the Oil pie.

Oil imports into the U.S. continue to decline at .7% per month, as they have for the past 48 months or so.

OK. There it is. You are an analyst for the CIA. What are the likely and possible outcomes?

Intelligent commentary is requested.

Tuesday, June 8, 2010

The Politics of "Home"

By now we have all seen the disturbing video of Helen Thomas telling the Israelis to "Go Home".

(Disclosure: Like most Americans, I support Israel's right to exist. That does not mean I that like everything Israel does, any more than I like everything the U.S. government does. Neither does it mean that I am Jewish (I was raised Catholic and would define myself as Unitarian, my wife is from Asia and was raised Buddhist and cannot fathom this whole anti-semitism thing, and the closet thing we have to a family clergyman is an Orthodox Rabbi that was one of my closest confidants long before he became a Rabbi... go figure) nor a fundamentalist Christian supporting Israel for religious reasons (I am fairly secular). I support Israel because of the unique set of circumstances Jews faced at and just prior to Israel's founding - the world had failed them in their time of need and the surviving Jews of that time and place took matters into their own hands - just as the Founding Fathers of the U.S. had in their time. I guess it also does not hurt that Israel has been a staunch ally of the U.S.)

Stay with me... I am going to weave some disparate threads together for this post.

Telling Jews to go "home" or telling blacks to go "home" to Africa is very much the same thing as telling Europeans to go "home" - leave America to its "native" peoples, themselves immigrants from Asia - or tell Mexicans to "go home" from Texas or California... or tell whites in South Africa to go "home" to... oh, wait... they have live in South Africa for over 4 centuries...

Sometimes, cultures clash. They do so for a variety of reasons. When you figure out how to do that in a perfect way... you let me know. I found it strange that in exchanges with 2 guys I met on FaceBook, both avowed Socialists/Communists, that both of them brought up what they viewed as the subjugation of the "Native American" by the European settlers as a primary reason to despise the U.S. and end capitalism. My bet is they want the "Jews to go home", too. Certainly the whites in South Africa... but not the Mexican's in the U.S.

Not terribly consistent, to say the least! (nor terribly well informed. They should read "Scourge" on the history of Small Pox to understand what happened in the America's. I am pretty sure man did not create Small Pox, had little control over its spread, and given our history on the politics of HIV would be unwilling to quarantine large portions of population for being "Small Pox Positive").

I have no idea how to solve the culture clashes of this sort. Clearly, neither does Helen Thomas. I do kinda like my whole non-violence/sanctity of life position. When all else fails it gives folks a fall back position that keeps them from killing one another (when practiced). I also like assimilation, but what can be done with groups that adamantly refuse to assimilate? Some how forced breeding and murder seems to come up a bit short as a solution. Who are we to tell people how to assemble?

Given the FACT that between 4% and 5% of the population sends the wrong guy Father's Day cards because women cheat as much as men (Who do you think the cheating husband is sleeping with? Or who all those dirty politicians are cheating with? Somebody else's spouse (wife). People having sex get pregnant. Simple. Like. That. Before DNA testing came along there was an old saying: "Mama's baby; Papa's? Maybe."), and given the statement:

"When strange peoples meet - first they fight, then they fornicate."

well, we all know that many of these mortal enemies are actually reasonably closely related.

Don't tell them that, though... they are too busy hating and killing each other.

Thursday, June 3, 2010

"U.S. Wary of Nuke Blast" to stop GOM Leak

The "U.S. is wary of Nuclear Blast to stop GOM Oil Leak".

Well, thank the heavens and Halle-f***ing-lujah! Not using a Nuke might just be the first intelligent decision this administration has made.

For better or worse, America is now a nation of money managers (yours truly, guilty as charged), lawyers, accountants, programers, nurses, clerical workers, professors of woman's studies (hehehehehe!), etc... gone are the days where large numbers of us fixed our own cars, changed the oil, repaired the roof... the vast, vast majority of us has ZERO mechanical expertise, and accordingly, we really believe, almost on religious level, that our government can handle the evacuation of a half million people from an undetermined location (hurricanes like Katrina are notoriously fickle about where they land) in a matter of HOURS... or stop an Oil well blow out in 5,000 feet of water in a matter of days.

(Being a Wall Street Kn0w-Nothing I remember watching in AWE as my older brothers would build a gas station, literally from the tanks set deep in in the ground to the roof. Tanks, pipes, pumps, pump island, signs, building, electrical, welding, bathroom plumbing... these guys could do just about anything mechanically and given enough time solve any mechanical problem. If you took ALL of the MBA's and Phd's on Wall Street and all of the "Journalists" in the MSM and drove them up to this real life erector set they wouldn't know a backhoe from ARC welder; if you took them to my farm I would be willing to bet on the same sort of problem.)

There is an old saying in the military: "Amateurs talk strategy, professionals talk logistics". In other words, flanking strategy is less important than food, water, port-o-poties, and toilet paper in a military campaign.

It is my assertion that a nation that can't change a flat tire probably has some unreasonable expectations when assessing a GOM well blow out or a hurricane evacuation.

There is a great deal of "Get Some Even" going on here. A great many Non-Dems are furious at the treatment of GWB in the Katrina disaster; I know this is hard for the Obama "true-believers" and other Dems, but GWB was no more responsible for the unreasonable expectations of the American people (which the Media stocked with reckless abandon) than BHO is, in this case for the inability of TPTB to cap the Horizon Well in 5,000 feet of water. But that does not change the political realities; the Dems drew first blood, and did so with GREAT SUCCESS in the Katrina episode... and now the Non-Dems (that's my term for the 2 parties within the Republican party - the Libertarians and the not-so-Libertarian, as well as registered independents) are using that play book against its creators.

Well, that's just the way it is in American politics. It will be up to the electorate to reward or punish this strategy. My bet is they will continue to reward it, and that Obama unemployment slip is on its way.


B.P. is Britain's biggest tax payer. I wonder how they feel about losing this revenue source. B.P. is also the biggest dividend payor into the U.K.'s vast pension system and largest contributor to that nation's "Safety Net". The U.S. needs the U.K.'s support in Iraq, Afghanistan, the United Nations, and in any future conflict... Somebody should call up New York's Senator Schumer... he thinks B.P. should suspend its dividend...

Don't you just love unintended consequences?

Americans that are IN LOVE with Europe's safety net should keep in mind that most of the contributions for that in country's like Norway and the U.K. come from OIL REVENUES. No Oil revenues - NO SAFETY NET.

Wednesday, June 2, 2010

I'm from the Government, and I'm here to Help You

I am thrilled to see that the student debt machine is FINALLY getting the press it deserves.

Too bad we have been unable, thus far, to make the same connection that folks are making to Fannie Mae (and Sub-prime) lending and the housing market and student loans and the outrageous cost of tuition with health insurance and the outrageous cost of medical care.

It is utterly depressing that there are so many people like her facing decades of payments, limited capacity to buy a home and a debt burden that can repel potential life partners. For starters, it's a shared failure of parenting and loan underwriting.
But perhaps the biggest share lies with colleges and universities because they have the most knowledge of the financial aid process. And I would argue that they had an obligation to counsel students like Ms. Munna, who got in too far over their heads.

Failed parenting? These are the parents from less well off backgrounds that fought through the system to get their kids into one of the "top" colleges. These are the parents from working class backgrounds that stayed up countless nights after work to help the kids with their homework. These were the parents that were determined to give their kids opportunity.

"Failed parenting"? These parents and their kids were led to the slaughter by the outrageous snobbery of the establishment institutions, and these institutions were more than capable of calculating the economic benefit of their sheepskin. (The sad fact that this young woman was silly enough to seek a degree in, get this, woman's studies (LOLOLOLOLHAHAHAHA! is that a SCREAM??!! Who does she think she is - ANITA HILL??!! Sorry, that got away from me...) does not excuse the system - that system just is what it is... a horrible, debt creation and enslavement program.)

I am a career finance guy, it was a no-brainer for me to see this. Asking a mechanic to see this is like asking me what's wrong with your car.

And the line about "repelling life partners"? I can tell you from experience that marrying into a massive student debt is a serious burden on a young couple/family trying to get a start in life... after all, people with student debt don't exactly have family money to make a mortgage down payment with, or to help in an emergency or job loss. These are the kids that are on their own from a young age. To harm them in this fashion is simply despicable, but the "elite" schools ran out of wealthy suckers... somebody has to keep the elite in blazers and mocha frapachinos...


The U.S. is between a rock and a hard place vis a vi B.P. and the GOM Oil and Nat Gas production. If you think fisherman are suffering in the GOM, "you ain't seen nothing yet". The decrease in production in the GOM from drilling bans and FEAR that if you make a mistake you might wind up indicted by the Federal Government is going to have a significant effect on the local economy. There is NO OTHER INDUSTRY to speak of in the GOM. Every business, large and small, can thank the offshore Oil and Gas industry for all of the money coming into the region (with the exception of Government transfer payments, the taxes for which come from the payrolls of the Energy industry and their support industries).

Further, if I am correct in my assessment that with the GOM producing 15% to 18% of U.S. Nat Gas, and a larger portion of non-Alaska Oil, the contraction in the rest of the U.S. economy will put a lid on employment expansion within 12 months.

We have painted ourselves into a corner. Sometimes luck is with you, and sometimes it is not. An Oil supply problem elsewhere in the world, or an L.A. earthquake or a major hurricane hitting Miami (or any other big city on the east coast) and the U.S. economy will really find out what its made of given a significant contraction of domestic Oil and Nat Gas production.

But at least the administration is going to hang a few of the engineers on the Horizon platform, and maybe an executive or 2. But Government Sachs? The folks that nearly destroyed the financial system? Off scott free, probably to buy the assets of what is left of B.P.


Tuesday, June 1, 2010

Obama Channeling Nixon

The U.S. Department of Justice has begun a witch hunt, er, criminal investigation into the Horizon blow-out.

How disgusting.

In an effort to save himself from one term-itis, the President is willing to burn whomever/whatever alive at the stake. The Mob grows hungry. The enlightened one grows desperate.