Fuel, Money, Climate …


The following articles and videos need little in the way of explanation:

Gail Tverberg on petroleum fuel:

 

Lower Oil Prices – Not a Good Sign!

Are lower oil prices good news? Not really, if it means the world is sinking into recession.

We know from recent past experience and from common sense that higher oil prices are a drag on oil importing economies, since if more $$$ are spent on the same amount of oil, there is less to spend on discretionary goods and services. In addition, oil money sent to oil exporting countries is likely to be spent within those economies, rather than being reinvested in the oil importing country that the funds came from.

 

 

Figure 1. A rough calculation of expenditure (in 2011$) associated with oil imports or exports, based on 2012 BP Statistical Review data, for three areas of the world: the Former Soviet Union (FSU), the sum of EU-27, United States, and Japan, and the Remainder of the World. (Negative values are revenue from exports.)

A rough calculation based on 2012 BP Statistical Review data indicates that the combination of the EU-27, the United States, and Japan spent a little over $1 trillion dollars in oil imports in 2011–roughly the same amount as in 2008. Governments have been running up huge deficits and have been keeping interest rates very low to cover up this damage, but it is hard to make this strategy work. The deficit soon becomes unmanageable, as the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) countries in Europe have recently been recently been discovering. The US government is facing automatic spending cuts, as of January 2, 2013, because of its continuing deficits.

 

Anyone paying attention @ Economic Undertow is familiar with Gail’s argument: the same high price of crude oil that unravels the waste-based economy is the price needed to bring new oil to markets. Here is another economic paradox: we burn value so as to ‘afford’ more value to burn. This is as pointlessly counterproductive as burning gold.

Nouriel Roubini on money (Bloomberg):

 

 

Roubini excoriates system management, the absence of banking system accountability, the inherent conflicts of interest within banks and institutional bloat: The ‘Too Big to Fail’ banks are bigger than they were in 2008:

 

“The core of the Eurozone does not want to take on the credit risk involved in any variance of credit mutualization … you will have a worse crisis, not six months from now but another, bigger crisis in the next two-weeks … It’s a perfect storm … you could have a collapse of the Eurozone, a US double-dip, a hard-landing of China, a hard-landing of emerging markets and war in the Middle East …”

 

David Roberts explains climate change simply enough even an economist can understand (TEDx, The Evergreen State College):

 

 

If we keep the pedal to the metal we blow up the entire human science experiment. Humans give ‘intelligent life’ a bad name.

The outcome of a measly 0.8° C (from Bloomberg): How about $10 corn?

 

U.S. Corn Growers Farming in Hell as Midwest Heat Spreads

Jeff Wilson (Bloomberg)

The worst U.S. drought since Ronald Reagan was president is withering the world’s largest corn crop, and the speed of the damage may spur the government to make a record cut in its July estimate for domestic inventories.

Tumbling yields will combine with the greatest-ever global demand to leave U.S. stockpiles on Sept. 1, 2013, at 1.216 billion bushels (30.89 million metric tons), according to the average of 31 analyst estimates compiled by Bloomberg. That’s 35 percent below the U.S. Department of Agriculture’s June 12 forecast, implying the biggest reduction since at least 1973. The USDA updates its harvest and inventory estimates July 11.

 

The Dust Bowl drought period lasted from 1932 until 1939. Imagine seasons-long heat waves and continuous droughts from now until 2020 across the US. Farmers irrigate using water pumped from the Ogallala Aquifer however this requires diesel fuel for the pumps as well as water in the ground. Expensive diesel fuel means very pricey corn or corn that bankrupts the customers who buy it. Absence of ground water means no farms at all and serious declines in yields.

A small adjustment of price at the margins is all that is necessary to make a particular venture unaffordable. Food price increases have outsized rebound effects on politics in the developing world where there are either droughts or massive floods. Compensating for climate effects requires more energy which in turn effects the credit markets. Attempting to resolve one set of problems amplifies others elsewhere, meanwhile large numbers of people are vulnerable.

Bruce Krasting on money:

 

Swiss reserves jumped an incredible CHF 59B ($61B) in June. The only question in my mind is, “How long can this last?” Switzerland can’t increase reserves on an unlimited basis; they can’t absorb Euro60B a month.

The current boss at the Swiss National Bank (SNB), Thomas Jordan is responsible for the Peg policy that is behind the unwanted reserve creation. It’s important to remember that Jordon is relatively new to the job. He stumbled into the hot seat when the former head of the SNB, Philippe Hildebrand’s wife got nailed trading currency when she shouldn’t have been.

Jordan is a well-educated technocrat who is also an old hand at the SNB. He inherited the currency peg policy from Hildebrand, but history will mark his name in the books if the policy fails. I’m sure that Jordon is aware of this. What’s his state of mind?

Jordan doesn’t have the full support of the government behind him. The same domestic politics that successfully dumped Hildebrand are working against Jordon.

If Switzerland is to maintain the current 1.2000 peg to the Euro, there has to be something more in the offing. The endless intervention is not going to work. The FX market is much bigger than the capacity of the SNB. The only option left for Jordon is exchange controls and a complete shutdown of the Swiss border. Jordon has hinted that these steps are coming on several occasion in the past month.

When Switzerland adopts exchange controls, the rest of Europe will soon follow. What will be the global market response from these measures? It will scare the crap out of capital. I think exchange controls will bring a panic; there is no safe place to hide in a panic. The possibility of this happening is not in the price of assets today.

 

Here we go again: as Greeks and others remove euros to Switzerland, the central bank exchanges them at a fixed rate so that the franc does not become scarce/expensive. The outcome of a pricey Swiss franc is a teetering balance sheet along with hyper-expensive exports: ‘Heidi’ videos, leather shorts, cuckoo clocks and cheese with holes in it.

 

 

The petroleum swap is able to set the money price effectively is because there is an upper bound: a fuel price where the economy stops working. There are few other goods with upper bound effects, interest rates on borrowed money is another one.

Central banks and others attempt to set the price of money by ‘fixing’ or manipulating interest rates: there are ‘bond vigilantes’, ‘Libor rigging’, central bank bond-buying and ‘Quantitative Easing/QE’. Meanwhile, petroleum mass-consumption has shifted the credit-cost of money toward the petroleum-cost of it. Central bankers are fringe players in this new game: zero-percent reserve rates and other policies don’t work any more. There is the hated liquidity trap, the pushing of the string, central banks without relevance.

Credit costs push higher as lenders vanish. In Spain and the other Mediterranean states there is a credit embargo and rate arbitrage between countries. The effect of high rates is identical to the effect of high petroleum prices: one can be considered a proxy for the other.

The underlying meme is complex: the shift is from endogenous to exogenous ‘money’. Instead of the fiat variety we have resource-based ‘petro-money’ that is no different from the gold-standard. The world is stuck hyper-deflationary money and a pitiful helpless establishment.

What happens next? The short answer is there will be no more euro. Exchange controls would be a repudiation of the basic euro principle, its reason to exist in the first place. All the European countries face the same flows of flight capital as the currency peg is destroying the euro-economies one by one. Controls would be the signal to panic. There would be the race for the exits at one time. The countries would install controls to keep what capital they have from fleeing. At that point there is only the name, euro.

China and money:

 

Price Data Suggest Specter of Deflation in China

Keith Bradsher (NY Times)

Prices are tumbling across the Chinese economy, according to government data released Monday, as a flood of goods pouring out of the country’s factories and farms exceeds anemic demand from Chinese households and businesses.

The downward trend makes it much harder for businesses to sell enough goods to repay loans that they took out, usually on the expectation of rising prices. Falling prices also discourage investment, which had slowed sharply this spring, and gave consumers an incentive to delay purchases until prices could fall further.

The news of falling prices, together with a pledge by Prime Minister Wen Jiabao on Saturday to maintain stringent bans on real estate speculation, produced a slide Monday in mainland Chinese stock markets. The main index of the Shanghai stock market dropped 2.4 percent, while the Shenzhen stock market’s benchmark fell 2.2 percent.

 

China has been a candidate for hyperinflation to occur and still might, however declining interest rates and the slowdown of Wall Street lending in general mean the long-running carry trade bringing dollars to China has run its course. Without a flow of new capital, hyperinflation appears to be less likely. Fewer funds are also being imported by manufacturers as sales slow in Europe and the US.

The popular idea has been that money would fail first, then peak oil would arrive. Ten or twenty years down the road the first effects of climate change would be felt. The schedule gave us plenty of time to keep partying with the hangover put off as long as possible.

Peak oil in meaningful terms has occurred already. In 1998 a barrel of West Texas crude cost a little more than ten dollars. The world’s tank has been emptying ever since. The climate problem is emerging here and now … and money worth is vanishing fast. We’re running out of tools … and time … to make a difference.

The climate situation is probably the most challenging, to voluntarily cease business activities that will ultimately bring the end to business activities and pretty much everything else.

For thousands of years the human race has been managed by military men, adventurers and clergy. Bound by traditions, by often-contradictory internal rules, honor codes and the absence of institutional imagination, these two cadres directed human ambitions toward/against other humans. For thousands of years armies marched and empires rose and fell, shrines were raised up then toppled or abandoned. Meanwhile, the humans were never in danger of eradicating themselves because they lacked to tools to do so. The internal contradictions of management left the tools out of reach.

With modernity the management of society has devolved to merchants: ad managers, shopkeepers and money-lenders. As a consequence, human ambition has been directed against anything and everything indiscriminately and without any restraint. There is nothing in the way of tradition or honor to bind merchants and ‘entrepreneurs’ who only know how to steal, and promoters who only know how to lie.

It is past time to remove merchants from management roles and perhaps give them to farmers or some other group with more restraint. This is something that needs to be done before time runs out.

28 thoughts on “Fuel, Money, Climate …

  1. p01

    “[…] given a story to enact in which the world is a foe to be conquered, they will conquer it like a foe, and one day, inevitably, their foe will lie bleeding to death at their feet, as the world is now.” –Daniel Quinn.
    All hands on deck! Rejoice, men! We have fought long and hard, but in the end we have finally conquered the world!
    Now pack your shit, we’re going away.

  2. The Dork of Cork

    We in Ireland had a banking bubble in the 70s.
    The Banks got a free revenue stream from big Farmers who received money from Europe.(displacing small farmers who got less)
    They produced a mass of credit because they could reley on this income stream to pay for the debt they created which exploded agricultural land prices …this leaked out into the wider economy (more cars etc)
    The second Iranian oil shock then gave the coup de grace to the banks malinvestments…
    We had a very very big recession in the 80s – with some minor printing in 1986 before the credit boom of 87 and beyond.

    Number of new private cars Y1955 : 23,675
    Y1957 : 13,589 (Suez crisis low)
    Y1967 : 40,300
    Y1973 : 74,789 (euro entry and Yom Kippur peak)
    Y1975 : 53,066 (first oil crisis through)
    Y1978 :105,582 (second credit peak)
    Y1984 : 55,893
    Y1987 : 54,341 (EMU through)
    Y1990 :83,420 (pre gulf war peak)
    Y1993 :60,792 (EMU crisis through)
    Y2000 :225,269 (all time high – Y2000 eurphoria)
    Y2007 :180,754 (second Euro peak)
    Y2009 : 54,432 (dramatic crash)
    Y2010 : 84,907
    Y2011 : 86,932 (stabilisation at much lower level ?)
    And 2012……
    Decrease of 40.7% in new private cars licensed in June

    There were 5,481 new private cars licensed in June 2012, compared with 9,240 in June 2011, a decrease of 40.7%.
    Jan to June 2011 : 69,254
    Jan to June 2012 : 58,936…… so not stabilization then although the number of car regs is already higher then Y2009

    aspoireland.org/
    Go to the oct 17 2011 article and look at the Irish oil consumption graph.

    When you tell people we could be heading for a 1983 energy density with a extra 1 million people + on this Island you can get removed from Irish economic blogs.

  3. The Dork of Cork

    Whats this ?
    More Kickback from Hungry….. we can’t have this.
    From the FT (BeyondBrics section – sorry can’t link directly)
    Hungary’s financial transaction tax is latest snub to EU and IMF http://blogs.ft.com/beyond-brics/2012/07/10/
    Nonsensical and illegal.” that’s how András Simor, governor of Hungary’s central bank (pictured), described last week’s decision to extend a new financial transactions tax to include operations carried out by the central bank”

    As Roubini states Finland is also resisting this – Euro stuff , it can at least produce most of its vast electricity consumption independently (for the most part – its cold & dark during those long Winter months and its Forestary Industry is energy intensive I gather)

    Another strange one from the Beyond Brics crew.
    What’s Iran doing with Turkish gold?
    http://blogs.ft.com/beyond-brics/2012/07/09/whats-iran-doing-with-all-that-turkish-gold/#ixzz20FBNduDa

    “According to data released by the Turkish Statistical Institute (TurkStat), Turkey’s trade with Iran in May rose a whopping 513.2 per cent to hit $1.7bn. Of this, gold exports to its eastern neighbour accounted for the bulk of the increase. Nearly $1.4bn worth of gold was exported to Iran, accounting for 84 per cent of Turkey’s trade with the country.

    So what’s going on?
    In a nutshell – sanctions and oil.”…………

    Remember my link ? – video tram from Istanbul this June ?
    The place was hopping.
    The IEA energy data confirms this.

    Could be the end for Gold or the beginning – I have no idea.
    PS – what do you think of Andrew Gause
    He is a strange one – he is both a Greenbacker and a Goldbug.
    Not a Gold standard socialist using FOFOA speak.
    I think he is the best of the monetary conservative commentators although he does sell Gold for a living so……..
    http://www.youtube.com/watch?v=zlXtFVi386Y

    1. steve from virginia Post author

      That’s a tough audio to listen to for more than five minutes, a couple of middle-aged knowitalls whispering to each other conspiratorially, I wanna smack both of them.

      I don’t know enough about Gause to comment about him, except to say as long as there is a credit economy its inner workings will be abstract as they are now, regardless of its outer form. Consequently, the iniquities and destructive characteristics will be carried forward, with the users of said system asking, ‘why is everything so fucked up?’.

      Is it possible for a debtonomy to be successful or to evade its central paradox? If the answer is ‘no’ the tools for modulating decline do not exist. Either credit is the instrument of mad men or bad men or it does not work as intended. If the answer is ‘yes’, it means there can be a debtonomy that can restrain its operators, excludes those best able to get the most out of it. We rely on an enterprise that exists to corrupt and be corrupted: not a good place to be.

      I suspect that as credit in its current form unravels, for most forms of abstract ‘wealth’ to vanish, at that point there will be other forms emerging. I expect gold and other ‘hard goods’ to be part of any new/old system.

      1. The Dork of Cork

        @Steve
        Well listening to the above I think Gause has to play along with a tradional Gold conservative (real money?) radio Jock.

        On taking over the Fed – he cuts to the chase.

        http://www.youtube.com/watch?v=yAdUtAl6elM

        Income tax as a spillway……..early 1913 MMT genius ?
        FOMC………………
        Andrew Jackson…. flaws ? Austrian model ? eliminated the monopoly power of banks but not the ability of free banks to emit credit…….

        He a straight up uncomplicated Greenback position as far as I can tell.

  4. cg

    Farmers don’t have time to manage much else. How much energy restraint will the public allow, especially in this country? What happens when the farmers don’t get the fuel is the question I’ve asked myself for years now. When restraint arrives per force instead of a chicken in every pot we’ll support anyone who promises a full tank and realists will be considered traitorous. American leadership will (continue to) bomb third world consumers before rationally rationing, but regardless of how well they attempt to manage declining resources the slide will be swift once rationing begins. Watching Europe is seeing the jacks under the high end of the slide.

  5. Ed

    While the money quote comes at the end, I think the best humans will manage will be to give power back to the military and the clergy, in roughly that order.

    1. steve from virginia Post author

      Mexico has massive problems: over-population, declining fuel production, the conquest of the Norte by drug gangsters — and the corruption of the central government, over-running of the country by multi-national corporations … looks like a low-intensity war w/ US in the country.

      Sad …

  6. dolph

    I know that, as an American, you root for America, which is perfectly normal. I mean after all we don’t want to see our country descend into chaos.

    But it’s time to own up. Many people have written about the darker side of America and have been ignored or quieted, most recently Morris Berman, for example. Only in film, where these things can be spoken of as entertainment, are they allowed:

    When Europe lay in ashes that was the last chance for a world that few now can remember. It was replaced by Americanism which is morphed into global capitalism. We are all on the wheel, chasing after meaningless things and digits on a screen. The capitulation of the left at the beginning of the 80’s was, in hindsight of course, all but expected.

    Nobody knows how to do much but consume, even the producers. What is produced now is rendered obsolete in a year, which is why it’s treated with such scorn and why waste is ultimately our only genuine product.

    Even I have a hard time admitting this because it brings one back to square one which is the human condition itself. What does it say about us if the only we can finally live is by drinking Pepsi and watching the TV screen or surfing the web?

  7. Ellen Anderson

    That climate video was indeed simple and powerful. In a post last year Steve said it is too soon to say whether the industrial revolution was a terrible mistake. Want to rethink that Steve? Collapse of the waste generating system asap might leave something for life on earth in the future. Pretty bleak. We should start wikis on how to close down our local nuclear power plants when the grid goes down and credit and fuel are in short supply. How much concrete would we need? Could it be pre-placed? Decentralizing food production, focusing on potatoes instead of grains, and shutting down nuclear power plants and the only useful enterprises I can think of at this point.

  8. Sandor

    Massive depopulation solves quite a few of the ‘problems’ of overconsumption. It also has a way of shifting preferences and perceptions. The status quo is unsustainable, but the game may not play out the way we think. It’s not that I’m more optimistic than the ‘doomers’; I have a different imagination. There are many ‘useful enterprises’ to engage, foremost among them is the maintenance of one’s own reverence for the mystery of life. A quiet enthusiasm that digests bitter fruit. We are not stuck. As Steve is fond of saying, what is required now is imagination and the courage to use it.

    1. Ellen Anderson

      Hard for me to be new age in my old age. “Why should not old men (or women) be mad?”*

      *Yeats.

      1. enicar333

        Here is the complete poem –

        Why should not old men be mad?
        Some have known a likely lad
        That had a sound fly-fisher’s wrist
        Turn to a drunken journalist;
        A girl that knew all Dante once
        Live to bear children to a dunce;
        A Helen of social welfare dream,
        Climb on a wagonette to scream.
        Some think it a matter of course that chance
        Should starve good men and bad advance,
        That if their neighbours figured plain,
        As though upon a lighted screen,
        No single story would they find
        Of an unbroken happy mind,
        A finish worthy of the start.
        Young men know nothing of this sort,
        Observant old men know it well;
        And when they know what old books tell
        And that no better can be had,
        Know why an old man should be mad.

        …….

        Because that wise old Man
        Was once the drunken journalist
        All the dunce begat
        Was more children
        Only worthy to rot
        The Helen with the social welfare dream
        Brought down her City
        To it’s financial knees
        The wicked took power
        And forced the good to cower
        Observant old men may know it well
        But they still demand to drink from the well
        They have fanned the fire
        And have brought the ire
        Now they must all burn in Hell!

      2. Ellen Anderson

        Only the first 20 lines go in the file, of course. Now here is what the young Yeats thought about old age (until WWI and modernity intervened:)

        I WENT out to the hazel wood,
        Because a fire was in my head,
        And cut and peeled a hazel wand,
        And hooked a berry to a thread;

        And when white moths were on the wing,
        And moth-like stars were flickering out,
        I dropped the berry in a stream
        And caught a little silver trout.

        When I had laid it on the floor
        I went to blow the fire a-flame,
        But something rustled on the floor,
        And some one called me by my name:
        It had become a glimmering girl
        With apple blossom in her hair
        Who called me by my name and ran
        And faded through the brightening air.

        Though I am old with wandering
        Through hollow lands and hilly lands,
        I will find out where she has gone,
        And kiss her lips and take her hands;
        And walk among long dappled grass,
        And pluck till time and times are done
        The silver apples of the moon,
        The golden apples of the sun.

      3. enicar333

        That is a beautiful poem that evokes strong images I had in Childhood. However, those images are increasingly out of reach for many. Many whose only experience will be The Concrete Jungle. If you don’t know – does it matter?

        Quantity vs. Quality – There IS a difference. It looks like 2022 will arrive – sooner than we think!

        Here is the Future, Today: A dystopian future suffering from pollution, overpopulation, depleted resources, poverty, dying oceans, and a hot climate due to the greenhouse effect. Much of the population survives on processed food rations, including “soylent green”.

        Yeats would never be able to write his poems – because it is likely he would not experience Nature in the same way. The coming disaster WAS avoidable. Homo Sapiens – I think not.

      4. cg

        More Yeats:

        Turning and turning in the widening gyre
        The falcon cannot hear the falconer;
        Things fall apart, the center cannot hold;
        Mere anarchy is loosed upon the world.

        Opening of “The Second Coming”

        and his epitaph:

        Cast a cold Eye
        On Life, on Death.
        Horseman pass by!

  9. The Dork of Cork

    Hollande says Peugeot must renegotiate restructuring plan
    Financial Times‎ – 6 hours ago
    François Hollande, France’s new Socialist president, has described as “unacceptable” PSA Peugeot Citroën’s decision to lay off 6500 French……

    So France will import those cars…… if you are going to use them you might as well make them..especially if you have a surplus of electricity.
    Somebody better tell those chaps commenting on the FT there was such a thing calles the Franc at one stage.
    The labour arbitrage in Europe is getting real silly now.

    Osborne seems to have got the memo – 500 million for the electricification of the Midland main line.

    Osborne backs £10bn rail plan

    Financial Times‎ – 17 hours ago
    George Osborne will seek to reinvigorate the government’s growth agenda next week, before MPs depart for … Osborne backs £10bn rail plan …
    http://www.bbc.co.uk/news/uk-politics-18839483

    Dork – This investment could also be tied into increasing St Pancreas international operations as that is the terminus for this line with many substancial towns & stations on this route.
    This is a typical Midland mainline station serving a 20,000~ size town.
    en.wikipedia.org/wiki/Market_Harborough_railway_station

    Indeed Eurostar is reporting signs of weakness as the Hinterlands of London & Paris become all extracted out.
    http://www.rail.co/2012/07/12/eurostar-sees-fall-in-business-passengers/

    British investment in rail is not of a French scale but something seems to be happening (they will get more bangs for their Buck from the above operations rather then the construction of new high speed lines)……………………..
    Also from http://www.rail.co/
    “The Government has backed an investment of up to £500 million to build a new rail link between Heathrow and the South West.

    The link is expected to take more than one million cars off the roads around Heathrow and create the airport’s first rail link outside London.”
    (not so sure about linking rail lines to airports but…..as long as they are operational its better then cars…anything is better then cars.)

  10. enicar333

    Dork – I see mention on the riots in Belfast -“A night of serious rioting after rival Protestant and Catholic parades were allowed to go ahead within hours of each other in the nationalist Ardoyne district of north Belfast has left 20 police officers injured.” Is that limited to Belfast – or is the religious discontent spreading and exacerbated by a rotten economy?
    +++
    Daily Job Cuts reports: “PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, will shut the first auto factory in France in 20 years and reduce its workforce by 6.7 percent in an effort to stem widening operating losses.

    The automaker will cut a total of 14,000 jobs, with 8,000 additional positions being eliminated on top of the 6,000 posts already announced last year, Chief Executive Officer Philippe Varin said today at a press conference in Paris.

    French Prime Minister Jean-Marc Ayrault called the factory closing and workforce reductions a “true shock” for employees. Peugeot, Renault SA (RNO) and Fiat SpA (F) have posted the biggest sales declines this year in Europe, where Peugeot now expects the market to contract 8 percent. Moody’s Investors Service in March was the last of the three main credit-reporting companies to cut Peugeot’s debt rating to junk. ”
    +++
    Unionized Canadian Workers get shut out of the global economy: “A Winnipeg plant that manufactures block heaters is shutting down this year, putting about 200 people out of work as a result.

    Phillips and Temro Industries, based in Eden Prairie, Minnesota, is moving operations to its plants in the United States and China.

    The company’s vice-president, Kathleen Boe, told CBC News the decision to close the unionized Winnipeg plant is for efficiency’s sake.

    Boe said the company is consolidating all of its heating product work in its non-unionized Minnesota plant.

    The Winnipeg factory is expected to close by the end of this year.

    “They had a meeting and they told our members, ‘Well, we made $8 million but, you know, we’re moving this,” Leslie McNabb of the Steelworkers Union, which represents the Winnipeg employees, told CBC News on Thursday.

    “One of the members said, ‘Why do they have to rub it in our face?'”
    +++
    TRINIDAD — Citing low demand for its coal, the New Elk Coal Mine laid off 200 of its 235 workers and suspended operations Wednesday.

    The workers will be laid off for at least 60 days, according to mine Manager Ron Thompson.

    “We have 70,000 tons of coal stored that’s ready to sell and we just haven’t been able to sell it to any companies,” Thompson said. “There’s just no room to store the coal so we had to shut down operations until we are able to do so.”
    +++
    Looks like Michigan will be more dependent than ever on it’s nukes: “HURON BEACH, Mich. (AP) – DTE Energy Co. plans to close its coal-fired Harbor Beach Power Plant.

    The Huron Daily Tribune (http://bit.ly/LcT8Fv ) in Bad Axe says the decision results from federal emission standards that take effect in 2015.

    Russ Pogats is director of DTE Energy’s northern power plants. He says the company is evaluating its facilities that burn fossil fuels as it decides how to comply with regulations dealing with mercury and other toxins emitted by air.

    He says the Harbor Beach plant on Lake Huron at the tip of Michigan’s Thumb region is a logical choice for closure. When built in 1968, it was needed to provide voltage support because the area had no transmission system. Transmission lines are now being placed there.”
    +++
    Here in Racine – this weekend we have the Ironman Triatholon, Salmon-A-Rama, the Faux Key West experience for wealthy (or indebted) boaters at taxpayer funded gated facilities and a Mayor in panic “RACINE — The city is headed for a showdown over whether it can take back its union contracts for 2013-2014.

    Last year, before Act 10 collective bargaining changes took effect, the city approved prospective union contracts for 2013-2014. The contracts, which cover more than three-quarters of the city’s employees, are set to start in January.

    But faced with a deficit next year, the city’s Committee of the Whole voted 9-1 Thursday night to recommend the City Council rescind its previous adoption of the contracts.

    “We cannot even go to the unions and say, ‘Hey, how about we meet you halfway to avoid the bloodshed,’” Alderman Greg Helding said. “Our backs are against the wall. We don’t have a choice.”

    http://www.journaltimes.com/city-headed-for-union-contract-showdown/article_689c4d90-cd03-11e1-a232-0019bb2963f4.html
    +++
    In a NOTE of interest to Steve – We have just begun our “Principles of Lean Manufacturing” and “Lean Six-Sigma” and the instructor talked about the importance of cash flow and credit! Manufacturing IS all about cash flow and credit. Some of the films we watched – and that goes for MSSC training also – give me “the creeps” from time to time – I’m listening to the message, but I also see the operator behind the curtain – and know the truth is far more sinister – sort of like They Live with Rowdy Roddy Piper – “John Carpenter’s slow and deliberate immersion of the daunting and worrying fable of the corrupt, deceiving and indifferent economic, social and political society, that has wrapped itself around its people and who in turn have blindly accepted their fate.”

    WASTE: Waste is “anything other than the minimum amount of equipment, materials, parts,space, and worker’s time which are essential to add value to the product.” Shoichiro Toyoda

    That is the consequences of QUANTITY in a finite resource constrained World.

    NO Thanks.

    Give me the Principles and World of The Georgia Guidestones!

    1. The Dork of Cork

      @Einicar
      Belfast has a very alien culture to us Guys down in the deep south……

      Its a sort of tradition up there for some reason , this sectarian stuff – when the Dutch banks were creating their nation state model all those years ago it left a few externalties behind it………..
      They destroyed the tribal culture but left some very damaged people in their wake.
      We don’t really understand the place from down here in Cork which is pretty agnostic about all things in life.

      PS – You now cannot get a commercial flight between Cork and Belfast.
      You must get a Train to Dublin and then switch stations……..
      London & Paris is closer to Cork in many ways.
      en.wikipedia.org/wiki/Cork_Airport

  11. Chartist Friend from Pittsburgh

    Here’s another chart that shows how screwy everything is right now. Velocity of M1 tends to correlate with the price of crude, but now we have a situation where M1V is collapsing and the daily price of crude is trending higher (and potentially going much higher):

    1. steve from virginia Post author

      Hmmm … difficult divergence which suggests its own outcome.

      There is less economic substance to support prices. There is no buying of anything but fuel which puts pressure on other firms.

      What is confusing are the lags. Effects on the businesses are felt at different times in different places. This is true with the different petroleum (and lending) sectors. Government actions cause distortions, particularly in China.

      Looks like the Fed is going to have to get to work … ‘print’ some more money

      🙂

Comments are closed.