In Japan, the Fukushima reactor complex is being rained- upon by tropical storm Songda. Right now, the storm center is about 300km WSW of Tokyo, heading in an easterly direction. Cooler ocean water temperatures are sapping the storm of energy.

Keep in mind this storm was two days ago a supertyphoon. The storm has momentum — any storm is a ‘curve’ in the atmosphere — and a lot of energy remains with the storm, just not in the form of high wind. There will be heavy rain, perhaps enough to add significantly to the reactors’ museum collection of intensely radioactive water.

Caught with its ‘cheap’ pants pulled up tight around its neck, TEPCO begs forgiveness for not being prepared for a typhoon @ the beginning of typhoon season … TEPCO must have hoped the entire season would be canceled this year like “Secret Diary Of A Call Girl” .

 
From the ‘Not As Completely Useless As We First Thought’ department: Bill Clinton and New York mayor Mike Bloomberg are gearing up the fight against climate disruption (New York Times):

“This is enough to choke a horse, one of the two or three biggest challenges in the world,” Mr. Clinton said in an unusual joint telephone interview last week with Mr. Bloomberg. “But if we can prove that this is good economics, good public health and fights the most calamitous consequences of climate change, then we will have done a world of good.”

They are expected to announce a new formal partnership with the World Bank, which will eventually provide financial and technical assistance for cities seeking to reduce emissions by improving energy efficiency in transit, power generation, lighting and public buildings.

Cities now house more than half of the world’s population, and while they occupy 2 percent of the globe’s land mass, cities consume 70 percent of global energy and produce 70 percent of greenhouse gas emissions. If anything meaningful is going to happen on climate in the short term, Mr. Clinton, Mr. Bloomberg and their advisers say, it has to start in the cities.

“We are putting a stake in the ground around the idea that national and international governments have failed, possibly quite permanently, or at least in a way that they will not make any serious progress before it’s too late,” said Kevin Sheekey, a former deputy mayor of New York and principal political adviser to Mr. Bloomberg. “If you address the problems of the cities, there will be no need for China and India to sign onto some international accord. And thank God, because that’s not going to get done. It’s time to say it.”

The real challenge is to combat energy company sourced climate change deniers who have co-opted the discussion with well- funded, cleverly targeted misinformation campaigns.

What Clinton/Bloomberg can work on is a ‘one- size- fits- all’ energy policy that centers on conservation. Solving both energy shortage and climate problems starts with re-examining car- centric transportation.

This re-examination will not solve the culture, modernity, the progress narrative or role-playing by participants, including post- Warhol ‘superstars’ such as Clinton and Bloomberg. Maybe the duo can somehow step ‘outside’ the Disco 54 art- world context they have both created for themselves and which was waiting for them when they arrived. This might allow some breathing space for the rest of us before climate/energy reality pops over the horizon and annihilates modernity.

Meanwhile; the country at large appears perhaps to maybe/possibly be getting somehow/somewhat ready to come to some kind of terms with the peak oil climate/energy reality concept. When the words “Peak Oil” bleat from a headline of the Wall Street Journal rather than Economic Undertow it means that somewhere, somebody important is taking the oil- shortage reality seriously. How about on the American highway?

Um … uh, no?

Gas tanks are draining family budgets

Damian Dovarganes, AP

NEW YORK (AP) — There’s less money this summer for hotel rooms, surfboards and bathing suits. It’s all going into the gas tank.

High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.

Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.

Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina’s Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can’t ride as frequently as they would like.

“We used to do it a lot more, but not as much now,” he said. “You have to cut back when you have a $480 gas bill a month.”

The dynamic illustrated by this article cannot be a surprise to readers here: high energy prices allocate funds and returns away from non- energy opportunities. Returns to energy companies reduce returns elsewhere. Jeffery Wayman’s lunches are stranded by high oil prices, soon his motorcycles will be stranded, then his family’s house if it hasn’t been stranded already. Everything that is stranded is someone else’s business and source of income. Businesses stranded by high energy prices find themselves in a desperate twilight struggle to survive, firing staff and emptying out credit lines in the hope against hope that customers will somehow reappear before the lights go out.

… Customers don’t show up because they are broke, stranded themselves by high energy costs.

Both the stranding process and business struggles run counter to any inflationary impulse associated with the high prices. Eventually the demand is destroyed when the businesses fail. Allocation works up to the point where it stops. Jeffrey Wayman will allocate away from lunches toward gasoline but cannot allocate away from food. Comes the time comes when Wayman is hungry enough, he will ‘allocate’ his motorcycle to the pawn shop in order to eat.

None of this reality is allowed to puncture the narrative. Excess consumption is a condition. All else in the economy must give way to the consumption imperative:
 

Demand for gasoline has fallen for eight straight weeks as drivers try to cut back, but higher prices can’t keep drivers parked for long. Even with high prices this year, the government expects gasoline demand to grow slightly for the year.

“Drivers try to do what they can, but they have to go almost all the places they go,” says David Greene, a researcher at the Center of Transportation Analysis at Oak Ridge National Laboratory and manager of the Department of Energy website fueleconomy.gov. “There’s no magic gizmo that will drastically change someone’s gasoline use.”

Mike Siroub clutched his heart as he described the experience of filling up lately. He owns a Union Oil gas station in Arcadia, Calif., but one of his cars is also a 1975 Oldsmobile.

“Think about it,” he said. “If you’ve got a car with a 30-gallon tank and gas is $4 a gallon and you fill it up, you’re out $120.”

Oak Ridge National Laboratory’s- and US Department of Energy’s man David Greene personifies the narrow- mindedness that informs America’s Waste- Based Economy. He chooses to overlook what is right under his nose! Our gizmos do indeed drastically change gasoline use by pricing the economy that has been built up around cheap fuels into bankruptcy. The stranding process is conservation by another name.

When Mike Siroub buys $120 worth of gasoline, other businesses lose the chance to earn a part of that money. Returns concentrate rather than cycling throughout the broader economy. The $120 payment to Exxon-Mobil and Saudi Aramco is “less money this summer for hotel rooms, surfboards and bathing suits. It’s all going into the gas tank.”

It’s not just this summer, but summers going back to 2004. The consequence can be seen in the declining level of business transactions:

Figure 1: this is M2 velocity or non- velocity (St. Louis Federal Reserve Bank). People and things are hanging onto their money. The bumpy line within the pink bubble represents transactions during our puny ‘Potemkin Recovery’.

Figure 2: this base money – zero maturity instrument – velocity. Zero- maturity money is a good substitute for late- lamented M3 which included term deposits such as CDs. It is interesting to note the long- term trends. There is less ‘currency- money’ in circulation right now, much less over a very long period of time.

There was a trend increase in velocity or transactions from the Vietnam War period to the Iranian Revolution. During much of this period the US suffered from inflation. Fed Chairman Paul Volcker raised Fed short- term lending rates beginning in 1979 and into the early 1980s to quash it.

Velocity was both the cause and consequence of peoples’ desire to gain goods at almost any price rather than hold onto money.

Velocity has been on a long- term decline since, coinciding with the ‘great moderation’ and an exponential increase in credit. Credit transactions would not appear as base- money velocity, the credit mechanism is different from the cash- transaction mechanism.

The trend has been the cause and consequence of people desiring to take on debt and then use additional debt to service it.

Dollars also began to flow overseas beginning with US peak oil, into reserves, with less velocity an outcome.

A thousand entities can borrow simultaneously from a lender and gain tremendous aggregate purchasing power instantly. The same thousand can only gain incremental purchasing power over a long period from returns on cash transactions with each other. This is ‘quantity of money’ versus ‘ability/willingness to borrow’. Borrowing wins … for awhile.

At some point borrowing represents more debt service than it does purchasing power. When that point is reached, borrowing becomes counterproductive. This is where the indebted world is now … drowning in the stuff and unable to roll it over because of debt’s negative purchasing power.

All the drivers can purchase without limit as much gas as they like with their credit cards starting tomorrow.

Like Greece, they can then ‘find it difficult’ to repay for whatever reasons, casting the lenders into insolvency. What happens next? Credit represents cash returns brought from the future which is why businesses with intermittent cash flows rely on credit. However, credit is only viable when cash flow/current output is able to service the loans.

Borrowers can ignore the debts (default) and start transacting with cash again. Velocity will increase. The starting point or ‘growth basis’ of velocity is low. The serial transaction mechanism requires time and liquidity for an increase in transactions — velocity — to become noticeable.

This is why the current flood of bank credit does not appear in the money supply as indicated by MZM any more than it did at other times. People borrow to buy specific goods when they need or want to buy them, not to hold onto the borrowed funds ‘for a rainy day’. Nobody borrows for the future, they save for it if they can …

The lack of velocity is some people holding onto cash with the rest having cash unavailable. Credit becomes a substitute. For those with cash, credit is cost- free: that is, the ‘real’ cost of credit is zero when the rate of inflation is the same or greater than debt service costs.

For those without cash, debt grants some temporary purchasing power. The effect of this ‘undeserved’ purchasing power is the increasing bid on goods to be had with credit.

The insinuation of credit- money into every sphere of the economy made transacting with currency- money less necessary. Credit has made money scarce, the bad having driven out the good, in this case …