Tigerhawk argues that financial institution equity losses have resulted in a large reduction in lending capacity. Money is tight and expensive. He writes: “Since each dollar of equity can support $11 to $12 in lending, the net reduction in global equity has resulted in aggregate bank lending capacity contracting by $2 trillion. That is a huge reduction of lending capacity in a short period of time. The real economy will notice.” Whether or not there underlying value beneath the liquidity problems is an interesting question. The vultures are probably out in force to pick through the wreckage and buy up the profitable parts of the collapsing companies. Barclays have bought parts of Lehman:
“This is a once in a lifetime opportunity for Barclays,” said the British bank’s president, Robert Diamond, announcing the Lehman deal. … “With this transaction, we have the opportunity to continue the growth and development of our US investment banking and capital market franchises with one of the leading financial institutions in the world.”
But if Barclay was picking up the profitable pieces, the question of who could be persuaded to buy the bad paper was another story, one which was the subject of the Scotsman’s dramatic article describing last minute efforts to underwrite Lehman’s risky assets with government money. Fleets of limousines converged on meeting rooms packed with powerful bankers. Nobody needed encouragement to pick up the good stuff. The question that decided Lehman’s fate was who would take the turkeys home.
“Everyone expected to hear by early Sunday evening that the Fed/Treasury had managed to arrange a shotgun wedding for Lehman with someone – Bank of America, Barclays, private equity. A funny thing happened on the way to a deal. The New York Fed called in all of the head honchos and said that they had a great deal for them. One lucky participant would get to buy Lehman’s business and their ‘good’ assets for a bargain price. The others would get a consolation prize: a chance to contribute their own precious capital to fund a bank of Lehman’s ‘bad’ assets. The Fed and Treasury were said to be ‘adamant’ that public money would not be involved in any bail-out.
“No government money? OK, no deal.”
And the rest, as they say, is history. Much of Lehman went under and without the bailout the innocent were exonerated and guilty were punished, to use another cliche. But leaving aside the liquidity problems were to be solved, some have argued that the current crisis shows certain ways of doing business are no longer viable. The WSJ’s Deal Journal summarizes the doubts over the chain of value underlying investment banking operations can ever be made fully transparent. The suggestion is that in the future, investment banks must becoming part of financial institutions whose risk are better known — like commercial banks.
“It turns out that big investment banks do very well in good times, when no one feels any need to worry about their solvency. But in bad times, their black-box nature and bloated balance sheets mean that even other banks shy away from taking on the huge amount of unknowable risk that lurks within their walls.”
Clearly they will continue to exist in some form. The Washington Post reports that “senior executives at Goldman Sachs and Morgan Stanley rushed to defend the prospects for what has fast become an endangered species on Wall Street: the stand-alone investment bank. … while the pie may be smaller, so is the number of big firms angling for a slice. And that bodes well for the firms that are still around once the business recovers, said David Viniar, Goldman Sachs’s chief financial officer.” But he would say that, wouldn’t he?
Update:
Judith Weiss describes the sheer psychological impact of watching Lehman go down. Institutions like Bear Stearns and Lehman were so established, so seemingly permanent that it seems inconceivable to anyone who has lived with their physical presence all their lives that they could actually come tumbling down. Here’s another one of her posts, which predicts — correctly I think — that whenever a major psychological trauma occurs there is the inevitable search for a scapegoat. But just because we need need to blame someone doesn’t necessarily mean there isn’t someone who needs to be blamed.
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37 Comments
1. ridgerunner:The business won’t recover. Peak oil is upon us. Just as these houses of cards destroy the capital needed for investment in solar thermal. It’s going to be a rough twenty years ahead.
Sep 17, 2008 - 3:56 am 2. biggie:If were talking about investing in energy, what’s the return on investing in energy, specifically the new stuff?
Sep 17, 2008 - 4:28 am 3. biggie:And before we start bemoaning the lost opportunities for these companies to dole out our future, couldn’t we consider bottom-up approaches to investing in energy?
Are technologies mature enough such that a homeowner may benefit from investing in energy? Where’s the $1/year fridge, water heater etc?
Drilling here or there, coal, wind, NG etc – those are alot of fun to read about when I’m not working, but how can I invest in greater efficiency for myself?
Sep 17, 2008 - 4:33 am 4. ridgerunner:biggie,
Sep 17, 2008 - 4:39 am 5. biggie:Check out http://www.theoildrum.com/ for incredibly detailed analyses of the economic aspects of energy. As an individual investor, your question makes sense: “What’s in it for me.” But as a society, there is no choice but to invest in renewable energy. We have used up the cheap half of the fossil fuels. From here on, the choices are societal collapse or renewable energy.
Their on Google Reader, but I confess I do not read them regularly.
Couldn’t I also conceivably power my own house, no? Isn’t that a viable option, or do I need to power everyone else too?
Otherwise, its the same old tried equation of me, the noble voter, delegating the responsibility to a humble public servant.
Let’s hope Americans are beginning to understand the value of saving their money, and as productive as we are, we can accrue hopefully a functional quantity quickly. Then the question is what can we do with it?
Given the track record, wouldn’t we prefer something closer to a “resilient community?”
Sep 17, 2008 - 5:01 am 6. mark_b:Buddy Larsen:
Please weigh in with your opinion on petroleum here. About a decade ago I started accumulating Canroys as a poor mans hedge against the cost of heating my home. Those same Canroys are now paying my mortgage.
I’m sure I’ve seen you post on the Canroy boards. I don’t think this is peak oil. I think this is weaponized oil. And Putin is the target.
Sep 17, 2008 - 5:35 am 7. Joe Buzz:I agree it would be nice to hear from Mr. Larsen on this. He is most likely busy assisting with post-Ike clean up.
Sep 17, 2008 - 6:20 am 8. OmegaPaladin:Renewables are worthless. Where’s your base load power going to come from? What’s going to keep the lights on during cloudy days with low wind? Go nuclear or go home.
Sep 17, 2008 - 6:37 am 9. fedya:…or how about crisis on top of crisis?
Iran Needs Scary Headlines
informationdissemination.blogspot.com
If you are into the politics of the US election, you may want to take a few hours to update your position on Iran, because if this trend continues, it will be the next dominate issue in the campaigns. It really has nothing to do with the United States, rather the conditions are setting themselves up for major turmoil in Iran. If your strategic forecast isn’t predicting a major incident to steal headlines, you need a new strategic forecaster.
Fooey!
Sep 17, 2008 - 7:00 am 10. RWE:No one seems to be remarking on the tax aspects of the mortgage crisis.
Last year I supposedly made $90K in dividends and capital gains from mutual funds. And now all of that gain is gone, all of it and no doubt a lot more. But unfortunately I had to pay taxes on all of that Phantom $90K. Wrote the check and mailed it in. It’s gone and the taxes are gone.
So now do I write a letter to the IRS and say it was all a big mistake and I want my tax money back? Nope. No way.
Now, if someone had bought a house for $100K and sold it a few years later for $200K they would have paid taxes on that income and still have the rest of it. And if a guy bought that house for $200K, expecting to sell it for $300K a few years later, ended up selling it for $100K instead, would he have to pay taxes on the $100K he did not make? No, that Phantom money would be gone, too, but the IRS would not be expecting he pay taxes on money he never made. In fact, he gets to claim a $100K loss, as well as any interest and property taxes he paid on that white elephant.
The tax system is as much a factor in this crash as is simple human idiocy and greed.
Sep 17, 2008 - 7:27 am 11. Wolf Pangloss:RWE, can’t you do income averaging for some relief?
Sep 17, 2008 - 7:44 am 12. RWE:I have a friend who runs his house totally on renewables. He has solar photovoltaic panels and a storage system that can run his house in the mountains of Vermont entirely on its own. Of course he has a back-up generator powered by propane. And another small emergency back up generator powered by gasoline. And he needs no air conditioning in the summer because of where he lives and would not even consider living there in the winter. He has his main home a couple miles down the street from me, in Florida.
Yes, you are half-right OmegaPalidin. Renewables are not worthless, if they are useful in specific circumstances. BUT we are always going to have to assume that those solar and wind and Zero Point Energy systems made out of old Mason jars and Paladium will not be there, no matter how individually successful they may be. Because we don’t know if they will be there if needed.
So we need real power plants, sized appropriately, and nukes are the way to go.
Let the anti-nuke people freeze in the dark; they deserve it.
Sep 17, 2008 - 7:48 am 13. ridgerunner:RWE
Sep 17, 2008 - 8:15 am 14. Eggplant:You think investors will spring for new nuclear plants when a fuel source is uncertain? http://en.wikipedia.org/wiki/Peak_uranium
ridgerunner said:
“Peak oil is upon us. Just as these houses of cards destroy the capital needed for investment in solar thermal. It’s going to be a rough twenty years ahead”
Sad but true.
Twenty years ago we should have been building nuclear power plants along with “Sasol” type synthetic petroleum plants. It takes years to get those sorts of facilities up and running. We didn’t and now our economy is taking a major hit.
The $64,000 question: After all the economic dominoes have fallen, will there be enough liquidity left to convert our energy base to nuclear power and synthetic petroleum or do we go into an economic death spiral?
The problem with our economic system is it seems to only be “reactive”. Unfortunately many economic problems require decades of investment and preparation. We maybe in a classic “monkey trap”.
Sep 17, 2008 - 9:11 am 15. Dave:Let’s see: Lenders now do not have enough deposits to make loans at the rate they used to.
A bit of a problem, but let us not forget that some of that “used to” should not have been made.
So, lenders now have to get more deposits so they will have more reserves and can resume lending, hopefully at sensible rates this time.
How do they get more deposits? They have to pay more interest on savings accounts, that is what they have to do. Pay 5% on passbooks
and say 15% on time deposits and they will get lots of deposits in short order.
Of course money saved will reduce gross aggregate demand and if Keynes is to be believed that will cause all of us to perish from malnutrition in the Great Global Depression.
Gloom, despair and agony on me.
Sep 17, 2008 - 9:38 am 16. biggie:So I better go on to work and see if I can manage to glean some survival medicine for the day.
Anyone see the recent TED talk from Craig Venter where he spoke of being 18 months away from a prototype bacteria that metabolized CO2 into any sort of alcohol, even the beefy butanol IIRC. I’m not sure how we harvest the CO2, but you could use the same customized bacteria for any feed.
He described how their labs would smell like a gas station as the petri dishes were emitting fuel as by-product.
Sep 17, 2008 - 9:38 am 17. biggie:You’re discouraging saving money?
Note: if I save properly, I will need government intervention much less when dealing with healthcare expenses and taking care of my parents at some future date.
Is it unreasonable to think the more debt you’re in, the more you need the government’s “help?” And that saving more money is a powerful way to build local capabilities to buffet whatever surprises are down the road, especially those which require alot of $$$?
Sep 17, 2008 - 9:43 am 18. Roderick Reilly:“”"”"”"ridgerunner:
biggie,
Check out http://www.theoildrum.com/ for incredibly detailed analyses of the economic aspects of energy. As an individual investor, your question makes sense: “What’s in it for me.” But as a society, there is no choice but to invest in renewable energy. We have used up the cheap half of the fossil fuels. From here on, the choices are societal collapse or renewable energy.”"”"”"”
We haven’t used up fossil fuels by a long shot. As a matter of fact, we have a lot more fossil fuels than we will allow ourselves to drill and mine for after we give ourselves permission to do limited off-shore drilling. Developing renewable and alternate resources is definitely vital, and I think it should be done aggressively, but an economy that is still heavily dependent on fossil fuels needs to keep chugging along during the transition period (which will be much longer than politicians of all stripes seem to be planning for). The “we’re running out of fossil fuels” construct is a straw man put up by those with “new-agey” agenda for society. Even more perverse is the attempt to create an artificial shortage of fossil fuels by denying exploration rights to most of the potential new sites.
Sep 17, 2008 - 9:47 am 19. ridgerunner:Roderick Reilly,
Sep 17, 2008 - 10:13 am 20. Eggplant:You contradict yourself. If: [The “we’re running out of fossil fuels” construct is a straw man put up by those with “new-agey” agenda for society], then Why: [Developing renewable and alternate resources is definitely vital, and I think it should be done aggressively]
Biggie said:
“Anyone see the recent TED talk from Craig Venter where he spoke of being 18 months away from a prototype bacteria that metabolized CO2 into any sort of alcohol, even the beefy butanol IIRC.”
This Craig Venter is probably a con artist or a con artist’s sucker. You would be wise NOT to invest any money with him or the guy suckering him.
Turning CO2 into alcohol is like turning excement into filet mignon (it requires energy). The way you turn CO2 into alcohol is through some variation of the old fashioned way, i.e. shine light (energy) on a plant (or bacteria) that produces a sugar through photosynthesis, then ferment the surgar with yeast or some other microorganism (like bacteria) into alcohol.
Always be suspicious when someone proposes something that produces energy (or anything) for free. Guard your wallet when someone appeals to your greed.
Sep 17, 2008 - 10:40 am 21. LarryD:Maybe because developing and deploying economically viable alternatives to petroleum is going to take generations.
Algae based bio-fuels look promising, but they are not a primary energy source, they need an energy source as input. And like every other alternative, trying to scale up to industrial levels of production raises serious issues.
Sep 17, 2008 - 10:43 am 22. Eggplant:Roderick Reilly said:
“We haven’t used up fossil fuels by a long shot. As a matter of fact, we have a lot more fossil fuels than we will allow ourselves to drill and mine for after we give ourselves permission to do limited off-shore drilling.”
Be careful with the fallacy:
“More oil remains in the ground than we’ve take out.”
There’s more gold in remaining in California than was ever mined out. However almost all of it is too expensive to mine.
There’s more silver in Nevada and under Virginia City than was ever mined out. However almost all of it is too expensive to mine.
It’s relatively rare for an ore deposit to be completely exhausted. What almost always happens is the mine becomes so deep or costly that the economics of mining the ore is lost. The day before a typical mine is to be abandoned, one can go to the mine face and literally put their hands on high grade ore.
This same rule applies to petroleum or an other nonrenewable resource. That’s the root argument behind Peak Oil.
Sep 17, 2008 - 10:49 am 23. biggie:Well, the best con artist would be the one who convinced you he/she is legit, but Craig Venter has a few accomplishments under his belt…
I’m worried about posting URLs so I’d ask that you merely google “Mycoplasma laboratorium” and or “GLIMMER” and “MUMmer”
“Mycoplasma laboratorium” is the name of a synthetic organism they hope to create. The proof of concept would mean that you’ve reached a level of finesse such that customization of metabolism is possible.
I do wonder why its a “non-profit” organization that is developing them. Is that a conventional path to bring something to market?
Sep 17, 2008 - 11:24 am 24. RWE:Biggie: From the latest issue of Av Week:
Solarzyme has introduced a microbial-derived jet fuel that has met ASTM standards. The process is designed to use feedstocks such as wood chips and switch grass which are fed to algae and produces crude-like oil that can be refined into diesel and jet fuel. Cost of the final product is estimated to be $40 to $80 a barrel.
Sep 17, 2008 - 11:41 am 25. Eggplant:biggie said:
“I’m worried about posting URLs so I’d ask that you merely google “Mycoplasma laboratorium” and or “GLIMMER” and “MUMmer”. “Mycoplasma laboratorium” is the name of a synthetic organism they hope to create.”
I suggest you google “Gibbs free energy” or the “Second Law of Thermodynamics”.
Sep 17, 2008 - 11:43 am 26. biggie:Let me be the first person on the internet to admit I did not know what I was talking about.
I understand the skepticism, and to be honest, reading the views critical of Venter was educational. Maybe he’s full of it. Consider me taken by the con-artist and perhaps newly liberated. But biology provides solutions to more problems than we even know exist.
The capability to customize bacteria could allow us to convert/store energy from many different sources. We have energy all around us – whether its dance floors or humans walking or cars heating up in parking lots. The problem is to harness it.
And, yes, this wouldn’t replace a nuke plant. But it gives you more sources and don’t more sources = more secure supply of energy? Isn’t that what we should pursue?
Sep 17, 2008 - 12:53 pm 27. Joseph Somsel:The economy goes through cycles of innovation and contraction going back centuries.
What happens is new technologies that increase productivity enter the market and boost every sectors’ profitablity and lower their costs. Think electricity in the 20s, jet air travel in the 50s, the internet in the 90s.
After the growth in productivity slows, all that new liquidity continues to seek returns (of course) but the best returns are financial, as in money chasing money. The late 20s saw “holding companies” and margin buying, the 70s saw junk bonds, and the 00s saw mortgage derivatives.
As to the Oil Drum, some great stuff there but you’ll see a lot of people getting their doomsday thrills off and their leftist axes ground. Peak oil and peak gas will happen someday and opening more areas for drilling will delay that.
The analogy with gold too expensive to extract is weak in that it takes energy to make energy (or gold) so it is a bootstrap interaction. That’s captured in a concept of “energy return on energy invested” or EROEI. It is VERY imprecise and impossible to calculate given the lack of analytical boundaries for the problem. Still, it should be obvious that investing too much energy for too little energy return is a losing game. Corn ethanol is a classic example. Another issue is that all energy forms are not equal. For example, domestic hot water is in no way equal to high voltage electrical service.
Sep 17, 2008 - 12:55 pm 28. Roderick Reilly:To Eggplant:
Thank you for a very good point about the economics of extraction, but also keep in mind that Congress has deliberately put oil & gas exploration off limits in large areas, including the near-U.S. ocean floor. There is likely agood deal of economically extractable oil and gas in some of these regions. Also, technological solutions are becoming available to make shale and tar sands extraction more economically viable.
The point isn’t to reinforce a dependence on petroleum, but to give us as much margin as we can for as long as we can while alternatives have time to mature and take over increasingly larger portions of the energy load.
Also, I have no illusions about “energy independence,” for America, because that is not possible. Both parties are touting that fantasy, with the Democrats being the more egregious. However, LESS dependence on foreing oil is an achievable goal.
Sep 17, 2008 - 2:20 pm 29. jwillie:Cross posted on Tigerhawk:
That is a huge reduction of lending capacity in a short period of time. The real economy will notice.
Not necessarily. One of the sources of the subprime mess was EXCESS liquidity. Eliminating 4% of the total liquidity is probably not nearly enough.
That chart was probably produced by bankers for bankers and is therefore banker-centric in its focus.
Furthermore, you have to look at the distribution of the equity losses – heavily concentrated in money center banks lending to other financial institutions (hedge funds, investment banks, etc.) The vast majority of 8500 banks across the US make loans against local real estate and the cash flow and/or assets or real businesses. Consequently, the impact on main street should remain negligible.
Sep 17, 2008 - 2:57 pm 30. Peter Grynch:1) The federal government got rid of the uptick rule making it easier to short stocks*
2) The SEC is not enforcing their rules on preventing naked shorting
3) The FASB has a mark-to-market rule that causes distressed financial institutions to write down the value of some of their assets to ridiculuos “fire sale” levels
4) As we learned in the government seizure of Fannie and Freddie, when the government takes over a financial institution it wipes out the common and even the preferred stock.
Taken together, these constitute a “perfect storm” for the destruction of financial institutions. George Soros or Vlad Putin can pick a bank, short forty billion shares of it, create a panic and rest assured that the government will wipe out the existing shareholders to make sure he never has to cover.
*The argument against reinstating the uptick rule is “It probably won’t have any effect.
The argument for reinstating the uptick rule is “it costs nothing and may have a huge effect”
Given these two views why wouldn’t you reinstate the rule, except for the colossal ego and possible coruption of a few government flunkies?
Christopher Cox needs to be waterboarded!
This is a good example of “unknown unknowns”. If they reinstate the uptick rule and it stabilizes the market this will be proof positive that they were incompetent to get rid of it. For this reason alone they refuse to reinstate it.
Scary thought: Russia owns a ton of US debt and desperately needs to raise money to bail out their own banks.
Sep 17, 2008 - 3:25 pm 31. 3Case:Came across this quote today in my reading:
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles Mackay, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds
It’s from a book my Dad had me read while I was at prep school (next stop military school if I didn’t straighten up). Been thinking lately that I need to reread it. Pop’s point was that, hopefully, I would be living through numerous market cycles and that the book would provide insight. It may also have contributed to my skepticism about global warming…er…climate change…or whatever loada crap Al Gore is peddling these days….
Sep 17, 2008 - 4:16 pm 32. Eggplant:Roderick Reilly said:
“keep in mind that Congress has deliberately put oil & gas exploration off limits in large areas, including the near-U.S. ocean floor. There is likely agood deal of economically extractable oil and gas in some of these regions. Also, technological solutions are becoming available to make shale and tar sands extraction more economically viable.”
I don’t doubt that technology will make more energy available. I also don’t doubt that there is some oil off the coast of California that could become available if environmental protection laws were relaxed. Of course the big question is whether this additional petroleum would be significant (I doubt it).
Joseph Somsel brought up the point of EROEI “energy returned on energy invested”. I previously described how gold and silver mining in California and Nevada have been abandoned because the mines there were no longer economical. With petroleum, EROEI is a stronger constraint than mere economics. Even if petroleum is priced at $10,000/barrel, the petroleum would stay in the ground if it required 10 joules of energy to extract 9 joules worth of petroleum. Under that scenario, we’ll stop petroleum extraction from wells and go to petroleum synthesis, e.g. Sasol conversion (Fischer-Tropsch process) from coal. Twenty years ago, we should have gone over to nuclear power and Sasol conversion. Unfortunately we allowed ourselves to be snookered by underpriced OPEC petroleum and environmentalist craziness. Now we’re in trouble.
Joseph Somsel also mentioned the website:
http://www.theoildrum.com
I strongly recommend The Oil Drum as an information source with the caveat that it has signal-to-noise issues. People who believe in Peak Oil are sometimes called “peakniks” (I’m a peaknik). Unfortunately many of the commentators at the Oil Drum are garden variety moonbats and “doomers”. A doomer is a peaknik who believes “all is lost” due to Peak Oil, i.e. we’re doomed because there is no possible solution to Peak Oil. On a bad day, I have doomer tendencies but generally I’m optimistic that technology can eventually save us from Peak Oil.
Sep 17, 2008 - 4:28 pm 33. slade:RE: herd mentality and cycles.
My working theory is that once the life span becomes sufficiently extended, as it is now in the western world, we will have the requisite *historical memory* to better inform long-term decision-making. Personal history trumps the learned kind every time.
People in their 80’s have now experienced two major market crises, assuming that one may politely disagree with Franklin Delano Dave that the current crisis is still unfolding in depth and magnitude.
Nobody cares, but for the record, I did not ‘gamble’ my investment portfolio, I went for the low cost, “buy and hold” funds (with one exception – and Ken Heebner is keeping my head above water). So this argument that you lie with gamblers and wake up with [some disease] doesn’t hold much water with me. There used to be this concept of conservative investment – gone right out the window with this “over-leveraged risk-mismanaged market”.
Sep 17, 2008 - 5:08 pm 34. slade:Sasol conversion (Fischer-Tropsch process) from coal
Has my full support but the ethanol and biowaste people are fighting it tooth and tail.
The “technology transfer,” if that is the right phrase, has been poor. The technical information is still buried in academia and not disseminated in the broader public arena of politics.
Connections not yet made.
Sep 17, 2008 - 5:14 pm 35. cedarford:Eggplant – Good posts. I’d add a few things;
1. The loss of capital liquidity that should have been invested in energy instead of 400,000 dollar homes for burger-flippers on expired tourist visas – is tragic. We likely can scrape up the capital, but only with consumer belt-tightening, abandonment of Neocon ruinously expensive wars of choice, and abandoning elements of free trade so our wealth is not also pissed away overseas in conflict or trillion-dollar trade deficits. Or, by using wealth from our competitive superiors in Asia, or the Petro Kings for investments, but then given them the return on investment that should have stayed and multiplied in America..
2. There is no shortage of uranium, even though the Chinese are buying up major sources in Australia and Africa. Shortage assumes environmental insanity prevails and we do not recycle the 98% uranium not used in a fuel cycle, that we refuse to build breeder reactors or (long term) use fusion plants to enrich uranium and far more abundant thorium.
3. We omit discussion of natural gas substituting for much of the oil used in power equipment, chemical production, even transportation. Natural gas is abundant. Every cubic foot used for baseload electric generation instead of coal or nuclear (and sensible hydro, wind, and biomass sources that can feed into baseload), and instead of substituting for oil – is a crime. The Japanese have seriously gone this way. We can learn from them on what oil can be swapped for CNG.
4. Sasol may not be the best artificial oil process from an environmental or economic standpoint. Oil shale, coal-nat gas combined processes, breaking down the Venezuelan bitumin deposits appear to be superior. The Albertan oil sands are being exploited, but with more adverse environmental effects than just drilling.
5. No one mentions that Open Borders negates all conservation and the minescule contribution that solar, wind, and “tainted” ethanol provide. America is to go from 300 million to 370 million from it’s new 3rd and 4th world “citizens”…437 million by 2050.
Sep 17, 2008 - 5:21 pm 36. Joseph Somsel:I’ve got a new article in the queue at American Thinker discussing the new Manhattan Project to make nuclear gasoline from coal and water. The editor says he’s waiting for a news hook to post it.
I tried to make a guess on how General Groves would approach the project.
If you followed the arguments about the Hirsch Report from SAIC looking at alternate of in-ground hydrocarbons, one could extrapolate that we could keep up with petroleum depletion but we’d have to double or triple our capital investment over conventional oil to do so. At least, that’s my ballpark estimate.
As to worries about uranium shortages, that’s just more anti-nuclear disinformation. Uranium is bought on long term contracts, sometimes 13 to 15 years out. True, the spot market jumped but that’s very thin as the production capacity has been optimized to meet stable demand for years. There is no READY capacity to speak of. Production is ramping up worldwide, including within the US and will easily meet demand for a century or more.
http://djysrv.blogspot.com/2008/09/western-lands-uranium-gopher-for.html
http://www.uic.com.au/
Sep 18, 2008 - 11:20 am 37. slade:If you followed the arguments about the Hirsch Report from SAIC looking at alternate of in-ground hydrocarbons, one could extrapolate that we could keep up with petroleum depletion but we’d have to double or triple our capital investment over conventional oil to do so. At least, that’s my ballpark estimate.
Two points. First “in-ground hydrocarbons” presumably refers to shale oil and tar sands, as well as coal-to-liquid, which are three very different technologies with very different cost-benefit revenue streams. Second, the increase in capital investment over conventional oil – that has to be amortized over the “effective life” of the deposits. I cannot believe that the numbers for developing alternative hydrocarbon resources aren’t favorable. I am thinking disinformation. Remember the baseline is $600B to $700B *annually* for imported oil.
This country used to have guts.
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