States Of Crisis For 46 Governments Facing Greek-Style Deficits

Posted By on June 26, 2010

By Edward Robinson      June 25,2010

Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end.

Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.

Far from rebounding, the Golden State, with a $1.8 trillion economy that’s larger than Russia’s, is sinking deeper into its financial funk. And it’s not alone.

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.

“States are going to have to cut back spending and raise taxes the same way Greece and Spain are,” says Dean Baker, co- director of the Center for Economic and Policy Research in Washington. “That runs counter to stimulating the economy and will put a big damper on the recovery in the latter half of this year.”

More at:  http://www.bloomberg.com/news/2010-06-25/states-of-crisis-widen-as-46-governments-in-u-s-face-greek-style-deficits.html

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New Song In Congress

Posted By on June 25, 2010

The New Song In Congress, Bye Bye Bonus For Wall Street And Banks!

Bye

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Gene Inger’s Comments On The Gulf Oil Well

Posted By on June 24, 2010

Gene Inger……of the ingerletter.com

Remember my comment about BP wanting to drill in 500 ft. not 5000 feet Gulf depth? Turns out that everyone (even the Pentagon and Secretary of Energy and the Pres. as well) signed-off on deep drilling. Their logic was self-sufficiency in-event war came with Iran and we needed nearly 8-10 months of oil without worry about any closure as might occur of the Straits of Hormuz. Perhaps the timing of the fast-paced drilling had an undisclosed urgency to it after all (we really don’t know that part). But we do know that Washington green-lighted the Macondo drilling operation from the start, and that began in Keathley Canyon Block 102 Southeast of Houston (the Tiber Prospect). The Government authorized drilling up to 35,000 feet total, and this well run awry may as it turns out have been intended to make us self-sufficient (the opposite of catastrophe and indeed the politics would have been inverted). Given that the discovery well was ‘even bigger’ than anticipated (world’s largest) one has to wonder whether the ‘relief’ wells are desperately intended not only to ‘relieve’ but to produce petroleum (we sure hope so), but also to fulfill the undisclosed National Security imperative we hear of. It is one thing to talk about the SPR (strategic reserve) but another to be self-sufficient.

Gulf

www.ingerletter.com

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‘The Whole Casing System Is Deteriorating’…..Shell Oil Ex-CEO

Posted By on June 24, 2010

 
Sounds like the same thing Matt Simmons said a week ago!
  
Quotes – Former Shell CEO John Hoffmesiter
 June 23, 2010…
If you really want to stop a blowout the fastest way the most efficient way is you blow it in, you use explosives.  
1:00 Hoffmesiter:
Now the problem with that, that is risky A geologist would tell you that the fragility, the hardness of that salt dome, that sits on top of these reservoirs – if you put lots of infantesimal number of cracks in that salt dome, you’d be creating a large seep, which you’d never stop, because nature finds a way to push oil and gas up through the seep.
3:00 Hoffmesiter:
“It looks like we are facing an endless destruction of our, of our area here in North America – this is going to keep going and going and going it looks like.”   
5:00 Hoffmesiter:
The more oil we some coming out, the more it tells you that the whole casing system is deteriorating. The fact that more oil would be coming out rather than less oil, would suggest that the construction within the pipe is offering no resistance whatsoever, and we’re just getting a gusher.  
5:40 Hoffmesiter:
Get the oil off the surface but the problem with that is, they’re still using so much dispersant that all you get is a little sheen on the ocean, but then you get these big globules rolling up from underneath that hit the beaches.
http://www.floridaoilspilllaw.com
 
 

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Gulf Oil Danger Of Tsunamis From Methane? This May Be A Low Probability Event But Let’s Review It Anyway

Posted By on June 24, 2010

London, UK

A new and less well known asymmetric threat has surfaced in the Gulf of Mexico oil gusher. Methane or CH4 gas is being released in vast quantities in the Gulf waters. Seismic data shows huge pools of methane gas at the location immediately below and around the damaged “Macondo” oil well. Methane is a colourless, odourless and highly flammable substance which forms a major component in natural gas. This is the same gas that blew the top off Deepwater Horizon and killed 11 people. The “flow team” of the US Geological Survey estimates that 2,900 cubic feet of natural gas, which primarily contains methane, is being released into the Gulf waters with every barrel of oil. The constant flow of over 50,000 barrels of crude oil places the total daily amount of natural gas at over 145 million cubic feet. So far, over 8 billion cubic feet may have been released, making it one of the most vigorous methane eruptions in modern human history. If the estimates of 100,000 barrels a day — that have emerged from a BP internal document — are true, then the estimates for methane gas release might have to be doubled.


Tsunami: Low Probability High Impact Event 

Warnings

Older documents indicate that the subterranean geological formation below the “Macondo” well in the Gulf of Mexico may contain the presence of a huge methane deposit. It has been a well known fact that the methane in that oil deposit was problematic. As a result, there was a much higher risk of a blow out. Macondo shares its name with the cursed town in the novel “One Hundred Years of Solitude” by the Nobel-prize winning writer Gabriel Garcia Marquez.

By some geologists’ estimates, the methane could be a massive bubble trapped for thousands of years under the Gulf of Mexico sea floor. More than a year ago, geologists expressed alarm in regard to BP and Transocean putting their exploratory rig directly over this massive underground reservoir of methane. Warnings were raised before the Deepwater Horizon catastrophe that the area of seabed chosen might be unstable and inherently dangerous.

Methane and Poison Gas Bubble

The US Environmental Protection Agency (EPA) has found high concentrations of gases in the Gulf of Mexico area. The escape of other poisonous gases associated with an underground methane bubble — such as hydrogen sulfide, benzene and methylene chloride — have also been found. Recently, the EPA measured hydrogen sulfide at more than 1,000 parts per billion (ppb) — well above the normal 5 to 10 ppb. Some benzene levels were measured near the Gulf of Mexico in the range of 3,000 to 4,000 ppb — up from the normal 0 to 4 ppb. Benzene gas is water soluble and is a carcinogen at levels of 1,000 ppb according to the EPA. Upon using a GPS and depth finder system, experts have discovered a large gas bubble, 15 to 20 miles wide and tens of feet high, under the ocean floor. These bubbles are common. Some even believe that the rapid release of similar bubbles may have caused the sinking of ships and planes in the Bermuda Triangle.

50,000 to 100,000 PSI

The intractable problem is that this methane, located deep in the bowels of the earth, is under tremendous pressure. Experts agree that the pressure that blows the oil into the Gulf waters is estimated to be between 30,000 and 70,000 pounds per square inch (psi). Some speculate that the pressure of the methane at the base of the well head, deep under the ocean floor, may be as high as 100,000 psi — far too much for current technology to contain. The shutoff valves and safety measures were only built for thousands of psi at best. There is no known device to cap a well with such an ultra high pressure.

Oxygen Depletion

The crude oil from the “Macondo” well, which is damaging the Gulf of Mexico, contains around 40 percent methane, compared with about 5 percent found in typical oil deposits. Scientists warn that gases such as methane, hydrogen sulfide and benzene, along with oil, are now depleting the oxygen in the water and are beginning to suffocate marine life creating vast “dead zones”. As small microbes living in the sea feed on oil and natural gas, they consume large amounts of oxygen which they require in order to digest food, ie, convert it into energy. There is an environmental ripple effect: when oxygen levels decrease, the breakdown of oil can’t advance any further.

Fissures or Cracks

According to geologists, the first signs that the methane may burst its way through the bottom of the ocean would be manifest via fissures or cracks appearing on the ocean floor near the path of least resistance, ie, the damaged well head. Evidence of fissures opening up on the seabed have been captured by the robotic midget submarines working to repair and contain the ruptured well. Smaller, independent plumes have also appeared outside the nearby radius of the bore hole. When reviewing video tapes of the live BP feeds, one can see in the tapes of mid-June that there is oil spewing up from visible fissions. Geologists are pointing to new fissures and cracks that are appearing on the ocean floor.

Fault Areas

The stretching and compression of the earth’s crust causes minor cracking, called faults, and the bottom of the Gulf of Mexico has many such fault areas. Fault areas run along the Gulf of Mexico and well inland in Mexico, South and East Texas, Louisiana, Mississippi, Alabama and the extreme western Florida Panhandle. The close coupling of new fissures and cracks with natural fault areas could prove to be lethal.

Bubble Eruption

A methane bubble this large — if able to escape from under the ocean floor through fissures, cracks and fault areas — is likely to cause a gas explosion. With the emerging evidence of fissures, the tacit fear now is this: the methane bubble may rupture the seabed and may then erupt with an explosion within the Gulf of Mexico waters. The bubble is likely to explode upwards propelled by more than 50,000 psi of pressure, bursting through the cracks and fissures of the sea floor, fracturing and rupturing miles of ocean bottom with a single extreme explosion.

Cascading Catastrophe Scenarios

1. Loss of Buoyancy

Huge methane gas bubbles under a ship can cause a sudden buoyancy loss. This causes a ship to tilt adversely or worse. Every ship, drilling rig and structure within a ten mile radius of the escaping methane bubble would have to deal with a rapid change in buoyancy, causing many oil structures in its vicinity to become unstable and ships to sink. The lives of all the workers, engineers, coast guard personnel and marine biologists — measuring and mitigating the oil plumes’ advance and assisting with the clean up — could be in some danger. Therefore, advanced safety measures should be put in place.

2. First Tsunami with Toxic Cloud

If the toxic gas bubble explodes, it might simultaneously set off a tsunami travelling at a high speed of hundreds of miles per hour. Florida might be most exposed to the fury of a tsunami wave. The entire Gulf coastline would be vulnerable, if the tsunami is manifest. Texas, Louisiana, Mississippi, Alabama and southern region of Georgia might experience the effects of the tsunami according to some sources.

3. Second Tsunami via Vaporisation

After several billion barrels of oil and billions of cubic feet of gas have been released, the massive cavity beneath the ocean floor will begin to normalise, allowing freezing water to be forced naturally into the huge cavity where the oil and gas once were. The temperature in that cavity can be extremely hot at around 150 degrees celsius or more. The incoming water will be vaporised and turned into steam, creating an enormous force, which could actually lift the Gulf floor. According to computer models, a second massive tsunami wave might occur.

Conclusion

The danger of loss of buoyancy and cascading tsunamis in the Gulf of Mexico — caused by the release of the massive methane and poisonous gas bubble — has been a much lower probability in the early period of the crisis, which began on April 20th. However, as time goes by and the risk increases, this low probability high impact scenario ought not to be ignored, given that the safety and security of the personnel involved remains paramount. Could this be how nature eventually seals the hole created by the Gulf of Mexico oil gusher?

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

 http://www.mi2g.com/cgi/mi2g/frameset.php?pageid=http%3A//www.mi2g.com/cgi/mi2g/press/210610.php

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Rick Ackerman…..Negative Growth Dead Ahead!

Posted By on June 24, 2010

In Summary…….There will not be inflation, particularly if quantitative easing, debt monetization and stimulus are being abandoned. It is Contraction with a capital “C” and nothing less. Negative growth is coming…..We are witnessing a sea-change of events unfolding that to my way of thinking spell a certainty of a global recession if not worse. Yes, that dirty “D” word is on the tip of my tongue: Depression……We are getting signals weekly out of Europe that change is in the wind – signals that would be perilous to ignore. Europe is about to enter a period that will be marked by a major economic contraction. It will affect every country on earth. None will be immune to the ominous political undertakings there.

Rick’s Picks 

Thursday, June 24, 2010

“Phenomenally accurate forecasts” 

A young friend asked me yesterday, “What on earth does negative growth mean?” and I had to laugh because it really is a ridiculous term dreamed up by political economists to put a positive spin on really bad news. I had actually never given the term any serious thought until then. “It means,” I said, “economic contraction and recession.” It really is no wonder the kids cannot figure out what is going on with all the nonsense terminology flapping about.

With France, Italy, Britain, Spain and of course Greece all now seemingly embracing austerity measures to bring their economies into line with EU terms specifying deficits be no larger than 3% of GDP, they are all about to experience “negative growth”.  A double dip recession is now hurtling our way and it will affect Canada and our housing markets in a very big way. Britain itself is targeting a debt reduction policy that it hopes will see that country’s massive debt fall to 40% or 50% of GDP by the year 2030. Prime Minister David Cameron has suggested that this will fundamentally change the lives of his countrymen for years to come. He is right.

Some economists and politicians are already spinning this development as a positive change and suggesting that inflation targets and growth objectives can be met while the engine of the economy is put into idle (if not reverse). That is nonsense, of course. And it is a hazard to your financial well being to believe it. We cannot have it both ways. We are headed for a deep correction and should just start telling it like it is. There will not be inflation, particularly if quantitative easing, debt monetization and stimulus are being abandoned. It is Contraction with a capital “C” and nothing less. Negative growth is coming.

Choosing Recession…or Worse

In other words, it spells recession. It is one thing for a single member of the European Union to choose a policy of restraint in order to bring its fiscal house back in order, but quite another when all of the heavy hitters of the EU do so at the same time. We are witnessing a sea-change of events unfolding that to my way of thinking spell a certainty of a global recession if not worse. Yes, that dirty “D” word is on the tip of my tongue: Depression.

The stars are lining up and they all have the same intention. Deficit-slaying to achieve balance, maintain bond ratings, and by so doing cap the costs of interest payments on the debts in which sovereign states are drowning. It may be a good thing, but you know what they say about too much of a good thing: It kills. And in this case, it kills growth. I will not even quibble over the outcome.

This is an important cumulative set of changes, and it has not been commented on enough by the wider media. It is happening with lighting speed, too. All of the countries I mentioned are now turning their backs on stimulus and Keynesian nostrums as solutions to their economic woes. Instead they are embracing pension reform, reductions in public-service spending, tax increases, program cuts, increasing the age of retirement, cuts to social service payments, and looking at national assets that might be sold to raise cash.

Media Missing the Big Picture

There are many business writers out there, and individually they have commented in detail on the policies of one country or another; at other times discussing single announcements such as retail figures, employment, CPI and related indicators of our economic health. They are missing the big picture, though. I think it may be a case of not seeing the forest for the trees. The significance of what is occurring in Europe cannot be overstated because it spells deflation with a certainty when you consider the events in conjunction with credit being restricted around the globe.

I have said before that I do expect a significant stock market correction to take place during June and leading up to the G8 summit — possibly even occurring as an outcome of announcements that flow from those meetings. I may be wrong, but I do suggest to any who are reading this that you take special care of your investments at this time. Being in cash is prudent right now. Backstopping is essential if you insist on staying in the wider speculative markets. Caution should be the order of the day.

The Speed of Events

We are getting signals weekly out of Europe that change is in the wind – signals that would be perilous to ignore. Europe is about to enter a period that will be marked by a major economic contraction. It will affect every country on earth. None will be immune to the ominous political undertakings there.

As I said, it is a surprise to me, the speed with which these events are unfolding, and it appears to be occurring in the absence of a media spotlight. Perhaps we have become immune or complacent when it comes to bad news? Connecting the dots is all the more difficult with distractions like the spill in the Gulf of Mexico and the Israeli raid on ships headed for Gaza clouding our media horizon and consuming most of the airtime.

We need to stay focused, though. Major events are shaping up in the background that cannot be ignored.

And they are about to bite us from behind.

***

Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts.  Rick’s Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick’s Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2010, Rick Ackerman. All Rights Reserved. www.rickackerman.com

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Methane In Gulf “Astonishingly High”: U.S. Scientist

Posted By on June 24, 2010

Methane in Gulf “astonishingly high”: U.S. scientist

(Reuters) – As much as 1 million times the normal level of methane gas has been found in some regions near the Gulf of Mexico oil spill, enough to potentially deplete oxygen and create a dead zone, U.S. scientists said on Tuesday.

Texas A&M University oceanography professor John Kessler, just back from a 10-day research expedition near the BP Plc oil spill in the gulf, says methane gas levels in some areas are “astonishingly high.”

Kessler’s crew took measurements of both surface and deep water within a 5-mile (8 kilometer) radius of BP’s broken wellhead.

“There is an incredible amount of methane in there,” Kessler told reporters in a telephone briefing.

In some areas, the crew of 12 scientists found concentrations that were 100,000 times higher than normal.

“We saw them approach a million times above background concentrations” in some areas, Kessler said.

More…

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Deutsche Bank: U.S. Financial Conditions Just Collapsed Back To Crisis Levels

Posted By on June 24, 2010

Vincent Fernando, CFA      Jun. 24, 2010

Deutsche Bank has a new and improved index of U.S. financial conditions, and this index just slumped back towards the lows of our recent crisis.

Deutsche Bank’s Peter Hooper:

Financial conditions appear to have worsened substantially in recent quarters based on our update of the broad index of US financial variables presented earlier this year at the US Monetary Policy Forum. In the wake of recent developments in Europe, increased stress in financial markets has pushed that index halfway back to its immediate post- Lehman crisis lows.

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The index is built from an array of financial indicators such as U.S. treasury yields, the volatility index (VIX), the stock market, Broker-Dealer leverage, among others. It’s a bit of a black box, but it’s calculation is giving a similar reading to what we saw during the worst of the financial crisis.

More…

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Soros….Europe Needs To Grow Its Way Out Of Trouble

Posted By on June 23, 2010

Jun 23, 2010

The Euro is a Patently Flawed Construct : SorosBillionaire investor George Soros believes the euro is a flawed construct.

According to Mr. Soros, the euro was an incomplete currency from the start as the EU’s 1992 Maastricht Treaty, which led to the creation of the euro currency, established a monetary union without a political union.

In a speech for delivery at Berlin’s Humboldt University, Soros said “the euro is a patently flawed construct.” The legendary investor who raked in $1 billion in 1992 by betting against the British pound also criticized Germany’s budget savings policy and its attitude toward the EU.

Reuters: “By insisting on pro-cyclical policies, Germany is endangering the European Union. I realize that this is a grave accusation but I am afraid it is justified,” he said.

“By cutting its budget deficit and resisting a rise in wages to compensate for the decline in the purchasing power of the euro, Germany is actually making it more difficult for the other countries to regain competitiveness,” he added.

Soros called for Europe to grow its way out of trouble and to then revise and strengthen the structure of the euro. He emphasized however, that “This cannot be done without German leadership.”

More at: http://wallstreetpit.com/32700-the-euro-is-a-patently-flawed-construct-soros

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“In God We Trust” Has Been On American Coins Since 1866………Why Does The Government Want To Remove It Now? Take The CNBC Poll On This Important Subject

Posted By on June 23, 2010

NBC is presently taking a poll on “In God We Trust” to stay on our American currency.
 
Please send this to every person you know so they can vote on this important  subject.
 
Please do it right away, before NBC takes this off their web page. Poll is still open so you can vote:
 
 
http://www.msnbc.msn.com/id/10103521/ <http://www.msnbc.msn.com/id/10103521/> 

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What Happens When, Not If….Interest Rates Rise!

Posted By on June 23, 2010

2010 c

Source: Heritage Foundation

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No Cluck For Our Buck!

Posted By on June 23, 2010

 2010 a

Source: Heritage Foundation

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Washington In Action

Posted By on June 23, 2010

 

2010

Source: Heritage Foundation

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New Home Sales Are On A Ski Slope Downward!

Posted By on June 23, 2010

clip_image002

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Fed Leaves Rates Unchanged, Citing Overseas Threats to U.S. Growth

Posted By on June 23, 2010

So now they tell us…….hasn’t this been ongoing for some time?

 
By CHRISTINE HAUSER

Published: June 23, 2010

The Federal Reserve’s policy-making arm said on Wednesday that it had decided to keep short-term interest rates near zero for “an extended period” in light of continuing threats to economic growth, including “developments abroad.”

The announcement by the Federal Open Market Committee was released at the end of its two-day meeting.

The Fed’s decision to stick with its low-interest-rate policy was in line with what analysts had expected, taking into account the pressures on consumer spending, an unemployment rate of 9.7 percent and other conditions that factor into the pace of the economic recovery.

There are also concerns, especially in equity and credit markets, that the European debt crisis could worsen, affecting the health of the global economy. This was reflected in the Fed’s statement, which said: “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.”

The Fed said it continued to anticipate that economic conditions, “including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

More…

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U.S. Strikes Back: Interior Secretary To Issue New Moratorium On Offshore Drilling In More Than 500 Feet…….

Posted By on June 23, 2010

From Reuters:

Interior Secretary Ken Salazar will offer testimony later on Wednesday on why the government will appeal that ruling and seek to renew the ban.

The ban was imposed after a well operated by British oil company BP exploded on April 20 and began spewing crude into the sea.

“We see clear evidence every day, as oil spills from BP’s well, of the need for a pause on deepwater drilling,” Salazar said in a statement.

Salazar will testify to a Senate subcommittee at 11:00 a.m. EDT on Wednesday, along with Michael Bromwich, the new head of the Bureau of Ocean Energy, which under its previous name the Minerals and Management Service was blamed for failing to police the energy industry adequately.

But President Barack Obama, also dealing with his top general in Afghanistan over inflammatory comments in a magazine article, postponed Wednesday’s energy policy meeting with senators which would have covered the process for passing energy and climate laws this year.

More at: www.zerohedge.com    

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New Brainstorm At Fannie Mae

Posted By on June 23, 2010

Fannie Mae To Deny New Mortgages To Deadbeats

06/23/2010 
 

According to Dow Jones,  bankrupt GSE Fannie Mae, announced “it won’t back new mortgage loans for seven years for homeowners who walk away from their mortgages although they were able to pay or did not seek a workout in good faith with their lender.”  “”We’re taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers and bad for communities.”

Agreed

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Magnitude 5.0 Hits ONTARIO-QUEBEC Border Region Of Canada

Posted By on June 23, 2010

Magnitude 5.0 – ONTARIO-QUEBEC

 

BORDER REGION, CANADA

 

2010 June 23 17:41:42 UTC

 

Earthquake Details

 

Magnitude 5.0
Date-Time
Location 45.862°N, 75.457°W
Depth 18 km (11.2 miles) set by location program
Region ONTARIO-QUEBEC BORDER REGION, CANADA
Distances
  • 38 km (24 miles) N (356°) from Cumberland, Ontario, Canada
  • 44 km (28 miles) NNE (21°) from Gatineau, Qu�bec, Canada
  • 51 km (32 miles) NNE (26°) from Hull, Qu�bec, Canada
  • 53 km (33 miles) NNE (21°) from OTTAWA, Ontario, Canada
Location Uncertainty horizontal +/- 2.3 km (1.4 miles); depth fixed by location program
Parameters NST=283, Nph=283, Dmin=148.6 km, Rmss=0.91 sec, Gp= 25°,
M-type=teleseismic moment magnitude (Mw), Version=8
Source
  • USGS NEIC (WDCS-D)
Event ID us2010xwa7
  • This event has been reviewed by a seismologist.

Tectonic Summary

The June 23, 2010 Ontario-Quebec border region earthquake occurred at 1:42 pm local (eastern) time about 60 km (38 miles) north of Ottawa, Ontario, Canada’s capital city. The preliminary estimate of magnitude (M) is 5.0, at a depth of roughly 19 km (12 miles). These estimates may change as more data becomes available.

This earthquake occurred near the southern edge of the Western Quebec Seismic Zone. Earthquakes within this zone are mostly small. They tend to cluster in a wide area that is slightly elongated northwest-southeast. Historically, earthquakes in the Western Quebec Seismic Zone have caused damage roughly once a decade. Three or four smaller events each year are felt in the region but are generally too small to cause damage. The largest earthquakes known in this part of Canada occurred in 1935 (M6.1), about 250 km (150 miles) to the northwest of todays event, and in 1732 (M6.2), about 150 km (100 miles) to the east. The 1732 earthquake caused significant damage in Montreal.

Earthquakes of the size of todays event are uncommon east of the Rockies, but many have occurred since the arrival of European settlers three centuries ago. In eastern North America and geologically similar regions worldwide, M5.0 to M5.5 earthquakes typically cause light to moderate damage out to a few tens of kilometers (miles) from the epicenter, depending on the number of people and type of buildings near the epicenter. Typically these earthquakes are felt hundreds of kilometers (miles) away. Earthquakes of this size and depth are unlikely to rupture the Earth’s surface, although exceptions are known.

The main faults near this earthquake zone trend northwest. These faults form the Ottawa graben and were most active several hundred million years ago. Some of the faults of the graben have been reactivated one or more times since then. The initial focal mechanism of todays earthquake suggests reverse faulting on a fault trending southeast-northwest. However, the size and depth of this earthquake make it uncertain whether the causative fault can be identified.

 

EARTHQUAKES IN THE WESTERN QUEBEC SEISMIC ZONE
Western Quebec Seismic Zone People in the large Western Quebec seismic zone have felt small earthquakes and suffered damage from larger ones for three centuries. The two largest damaging earthquakes occurred in 1935 (magnitude 6.1) at the northwestern end of the seismic zone, and in 1732 (magnitude 6.2) 450 km (280 mi) away at the southeastern end of the zone where it caused significant damage in Montreal. Earthquakes cause damage in the zone about once a decade. Smaller earthquakes are felt three or four times a year.

Earthquakes east of the Rocky Mountains, although less frequent than in the west, are typically felt over a much broader region. East of the Rockies, an earthquake can be felt over an area as much as ten times larger than a similar magnitude earthquake on the west coast. A magnitude 4.0 eastern earthquake typically can be felt at many places as far as 100 km (60 mi) from where it occurred, and it infrequently causes damage near its source. A magnitude 5.5 eastern earthquake usually can be felt as far as 500 km (300 mi) from where it occurred, and sometimes causes damage as far away as 40 km (25 mi).

FAULTS
Earthquakes everywhere occur on faults within bedrock, usually miles deep. Most of the bedrock in the Western Quebec seismic zone was formed as several generations of mountains rose and were eroded down again over the last billion or so years.

At well-studied plate boundaries like the San Andreas fault system in California, often scientists can determine the name of the specific fault that is responsible for an earthquake. In contrast, east of the Rocky Mountains this is rarely the case. The Western Quebec seismic zone is far from the nearest plate boundaries, which are in the center of the Atlantic Ocean and in the Caribbean Sea. The seismic zone is laced with known faults but numerous smaller or deeply buried faults remain undetected. Even the known faults are poorly located at earthquake depths. Accordingly, few, if any, earthquakes in the seismic zone can be linked to named faults. It is difficult to determine if a known fault is still active and could slip and cause an earthquake. As in most other areas east of the Rockies, the best guide to earthquake hazards in the Western Quebec seismic zone is the earthquakes themselves.

http://earthquake.usgs.gov/earthquakes/recenteqsww/Quakes/us2010xwa7.php

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Coast Guard Reports Problems Occurred In The Containment Effort

Posted By on June 23, 2010

Something Broke: Containment Cap Removed From BP Oil Leak After Problems Encountered; Large Increase In Spill Rate……

By Tyler Durden on 06/23/2010

The U.S. Coast Guard said there may be 2 deaths, but the oil flow is not completely unrestrcited, and some oil was being burned off on the surface.

More at: www.zerohedge.com

Click on image for live view:

 

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George Soros Speaks About Europe…..

Posted By on June 23, 2010

As a general rule, what’s bad for Europe is usually bad for the U.S. eventually!

Billionaire investor George Soros said continental European banks haven’t been “properly cleansed” after the credit crisis because they haven’t marked the value of their holdings to market prices.

“The current crisis is more a banking crisis than a fiscal one,” Soros, 79, said in remarks prepared for a speech in Berlin today. “Bad assets haven’t been marked to market, but are being held to maturity. When markets started to doubt the creditworthiness of sovereign debt it was really the solvency of the banking system that was brought into question because the banks were loaded with the bonds of the weaker countries and these are now selling below par.”

Banks are struggling to get short-term funding because the interbank lending and commercial paper markets have dried up, he said. Firms have instead turned to the European Central Bank for short-term financing and to deposit their excess cash, Soros said.

European policy makers have pledged to publish the results of stress tests on their banks in a bid to reassure investors. Only the region’s 25 biggest banks will be examined, according to Andrew Lim, an analyst at Matrix Corporate Capital LLP. Bank executives including Deutsche Bank AG Chief Executive Officer Josef Ackermann have said publishing the tests could undermine confidence in the banks unless governments promise aid.

“We cannot judge how serious the situation is until the results are published,” Soros said today. “Indeed we shall not be able to judge even then because the report will deal only with the 25 largest banks and the biggest problems are in the smaller banks, notably the Cajas in Spain and the Landesbanken in Germany.”

More at: http://www.bloomberg.com/news/2010-06-23/soros-says-europe-s-banks-haven-t-been-properly-cleansed-after-crisis.html

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CalPERS Unlucky Again

Posted By on June 22, 2010

I guess we could say CalPERS (California Public Employees’ Retirement System) is just plain unlucky….either that or they’re plain stupid.  Maybe a little of both.  After dropping a quarter of the value (and that’s being generous, it may be greater) of its $200-billion portfolio during the recession of 2008 and 2009, the country’s largest public pension fund is posting more big paper losses because of the massive 2-month-old BP oil spill in the Gulf of Mexico.   Since the real estate isn’t marked on losses, well….you get the point!  The more important question is what does CalPERS really have left and how do they  pay all those pensions.
 
 
June 22, 2010 

After dropping a quarter of the value of its $200-billion portfolio during the recession of 2008 and 2009, the country’s largest public pension fund is posting more big paper losses because of the massive 2-month-old BP oil spill in the Gulf of Mexico.

Since April 20, the 58 million BP shares owned by the California Public Employees’ Retirement System have plunged in value by $285 million, dropping from $586 million to $301 million, according to an analysis by Bloomberg News.

BP-related losses for all U.S. pension funds have totaled $1.4 billion as the value of BP stock tumbled 47%, Bloomberg data show.

— Marc Lifsher

More at: http://latimesblogs.latimes.com/money_co/2010/06/calpers-loses-big-on-bp-stocks.html

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Bad News Blues For British Consumers….Osborne Increases U.K. Value-Added Tax Rate to 20%

Posted By on June 22, 2010

June 22, 2010

 By Andrew Atkinson

June 22 (Bloomberg) — British Chancellor of the Exchequer George Osborne increased the value-added tax rate to 20 percent from 17.5 percent in the first permanent change to the levy on sales of goods and services in almost two decades.

“The years of debt and spending make this unavoidable,” Osborne told Parliament in London in his emergency budget today as he announced a package of spending cuts and tax increases to cut the U.K.’s record deficit.

The rate will increase from January and produce more than 13 billion pounds ($19 billion) a year of extra revenue by the end of this Parliament in 2015, Osborne said. “That is 13 billion pounds we don’t have to find from extra spending cuts or income-tax rises,” he said.

The VAT increase dwarfed other revenue-raising measures in a budget that sought to all but eliminate a deficit that reached 11 percent of gross domestic product last fiscal year.

The tax generates about 15 percent of total government revenue and retailers say the rise may dampen consumer spending as the economy emerges from its worst slump since World War II.

“We understand that the budget deficit needs to be tackled but we think the focus needs to be cutting public spending over tax rises,” Krishan Rama, a spokesman for the industry lobby group, the British Retail Consortium, said in a telephone interview yesterday. “What we’re concerned about is that the recovery at the moment is very fragile and consumer confidence is also fragile, so we don’t want something to fracture that.”

More at:  http://www.businessweek.com/news/2010-06-22/osborne-increases-u-k-value-added-tax-rate-to-20-update1-.html

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Wall Street Buyers Beware…. Lunar Eclipse This Weekend.

Posted By on June 22, 2010

This mention from Art Cashin,  Cashin’s Comments from the floor of The New York Stock Exchange……….

That Looming Weekend Cycle – We mentioned last week that there was a bit of a buzz around the floor about a cycle of some kind that was to kick in this coming weekend.  We nosed around trying to get a handle on the cycle but got some confusing results.

We think the reason the results were confusing is that there appear to be two very similar but actually different cycles.  They are both based somewhat on the upcoming Lunar Eclipse this weekend.

Arch Crawford, the technical/astrologer talks about the eclipse cycle he follows in one of his recent letters.  He says the last time he had a lunar eclipse with this aspect Chernobyl exploded.  (Sure to get your attention.)

The other mention of an eclipse cycle was made by Steve Puetz in The Unified Cycle Theory Newsletter.  Steve list 15 very severe crashes going back centuries.  He said that 13 of the 15 occurred around an eclipse and a proximate full moon.  His concern window is somewhat wider than Arch’s giving the eclipse effect several weeks to kick in.

We bring the cycles up because of the buzz they’ve drawn on the floor and trading desks.  If folks think they may have any validity, they  might just “press the bet” on any down move.

 

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Obama Administration Knew About Deepwater Horizon 35,000 Feet Well Bore, Green-Lighted And Fast-Tracked Project

Posted By on June 22, 2010

Submitted by Tyler Durden on 06/22/2010

    President Obama and Secretary of Interior Ken Salazar, Secretary of Energy Steven Chu, and Defense Secretary Robert Gates were informed that BP would drill an unprecedented 35,000 feet well bore at the Macondo site off the coast of Louisiana. In September 2009, the Deepwater Horizon successfully sunk a well bore at a depth of 35,055 below sea level at the Tiber Prospect in the Keathley Canyon block 102 in the Gulf of Mexico, southeast of Houston… According to the Wayne Madsen Report (WMR) sources within the U.S. Army Corps of Engineers and the Federal Emergency Management Agency (FEMA), the Pentagon and Interior and Energy Departments told the Obama Administration that the newly-discovered estimated 3-4 billion barrels of oil in the Gulf of Mexico would cover America’s oil needs for up to eight months if there was a military attack on Iran that resulted in the bottling up of the Strait of Hormuz to oil tanker traffic, resulting in a cut-off of oil to the United States from the Persian Gulf. Obama, Salazar, Chu, and Gates green-lighted the risky Macondo drilling operation from the outset, according to WMR’s government sources.

Source: www.zerohedge.com

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Statfor…….Germany and Russia Move Closer

Posted By on June 22, 2010

Geopolitical Weekly  

Germany and Russia Move Closer

 

 

By George Friedman | June 22, 2010

German Foreign Minister Guido Westerwelle will brief French and Polish officials on a joint proposal for Russian-European “cooperation on security,” according to a statement from Westerwelle’s spokesman on Monday. The proposal emerged out of talks between German Chancellor Angela Merkel and Russian President Dmitri Medvedev earlier in June and is based on a draft Russia drew up in 2008. Russian Foreign Minister Sergei Lavrov will be present at the meeting. Peschke said, “We want to further elaborate and discuss it within the triangle [i.e., France, Germany and Poland] in the presence of the Russian foreign minister.”

On the surface, the proposal developed by Merkel and Medvedev appears primarily structural. It raises security discussions about specific trouble spots to the ministerial level rather than the ambassadorial level, with a committee being formed consisting of EU foreign policy chief Catherine Ashton and Russia’s foreign minister.

Read more »

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1.2 Million Partnerships Own Over $1 Trillion In Commercial Real Estate. Too Big To Fail Dumping CRE Debt.

Posted By on June 21, 2010

The problems for commercial real estate are deep and significant and have the potential of stifling any sort of recovery.  Rather than looking at commercial real estate (CRE) as a reason for more stimulus or bailouts the question should examine why so many CRE locations are defaulting.  Can this be a sign that demand for goods, strip malls, condos, and other large projects are simply not in demand from a middle class that is confronting a new austerity?  The problems in commercial real estate have the potential of causing the same amount of market volatility as residential loans for a handful of reasons.  Unlike residential loans, there is little sympathy for CRE owners.  It is expected that those who buy into million and billion dollar projects understand what they are doing (even if this assumption is wrong as we are finding out).  So the potential for massive support here is limited from the public but we have seen the U.S. Treasury and Federal Reserve bail out virtually anything with a connection to the banking industry.

The CRE market is enormous:

Source:  McClatchy

$3.5 trillion in commercial real estate loans are out in the market.  The problems will be magnified for smaller regional banks that went into this market hand over fist.  There are little mechanisms to bailout this industry.  Yet why should there be a bailout function for real estate developers and investors that purchased land at overvalued prices and now expect to be made whole by the American public?  The middle and working class are largely opening their eyes to the massive wealth transfer that is taking place.  On the one hand you hear representatives telling the public to tighten their belts and be cautious with their money while trillions of dollars are transferred to the banking industry with no strings attached.  After 29 months of crisis, it looks like there is movement against the real estate industry as we heard last week that the Feds charged 1,200 people with mortgage fraud.  This is a step in the right direction.

Yet there is a growing examination of how commercial real estate loans are structured and who is making money from this.  As we all know, our government is spending large amounts of money it does not have.  Put aside the problems this will cause for the U.S. dollar down the line.  In order to come back into balance, two things can happen.  Either spending is cut to run on a leaner machine.  This is very unlikely given that last month without the government there would be no job growth.  The other option is to find other additional revenues meaning raising taxes.  Commercial real estate has caught the attention of many as a potential source of new found income:

“(Zanesville) Despite this, Congress might pass the American Jobs and Closing Tax Loopholes Act. This bill raises taxes on investment partnerships in real estate and other ventures by more than 150 percent and will stifle economic activity. Rep. Zack Space joined his Democrat colleagues in voting “yes,” and the U.S. Senate might vote on the legislation soon.

This bill increases taxes on carried interest, taxing it higher than the current capital gains rate. It will stifle profits on commercial real estate transactions and will harm the real estate industry, whose health is vital to economic recovery. The still-fragile real estate industry cannot handle this tax increase, too.

More than 1.2 million partnerships own more than $1 trillion in commercial real estate nationwide and rely on the current system to build and revitalize our neighborhoods. Business partnerships are the primary model for development of commercial investments. The Ohio Senate passed a resolution I sponsored urging Congress to maintain the current carried interest tax rates.”

Aside from the reporting trying to protect the CRE market, for too many years CRE owners have used tax loopholes that were designed to protect a grandparent from being booted out of their home because of taxes to their advantage.  There is little reason to offer special protection to this industry and as the U.S. government is hungry for money, it is highly likely that at some point the way CRE is valued and taxed will come under additional scrutiny.

The CRE market is merely one way governments from top to bottom are going after more sources of money.  After all, they’ve already picked the pockets clean of the middle class to bolster and support the banking industry.  Now that the too big to fail are protected at all costs, why not put the act of toughness on and go after smaller banks with too much CRE debt?  Once they fall over the too big to fail banks can have some CRE locations for a massive discount.  After all, who else is in the market to purchase CRE in today’s market?  Think this isn’t the case?

“(Housing Wire) JP Morgan sold $716.3m of commercial mortgage-backed securities (CMBS) bonds this week, marking the second deal this year.

The JPM deal marks the second CMBS issued in 2010 and one of the first since the freeze of the securitization market. The Royal Bank of Scotland issued the first in April 2010.”

The commercial real estate structure aside from being massive with $3.5 trillion in loans, also has an adjustment structure that doesn’t bode well for longer term stability:

Source:  Zero Hedge

If you look at the above charts, from 2009 to 2010 the amount of maturing CMBS has doubled.  It will double again from 2010 to 2011.  Then there is a significant spike from 2011 to 2012.  Even with the amount we are dealing with right now we are seeing major problems in large CRE projects including large Las Vegas condo projects.  There has been little to combat the above trend and what really can be done?  The banking industry was hoping to buy time to have some miraculous price recovery so they would be able to off load the properties to some other unsuspecting investor.  Unlike the stock market or banking profits, commercial real estate values are still near their trough:

Source:  MIT

Market prices remain depressed as you would expect given current economic conditions.  And that is why the amount of CRE loans going into default is large and growing.  If we look at the CMBS portfolio chart we realize that billions of loans in this market are largely toxic and inching closer to insolvency.  We are reminded every Friday of one or two banks being closed by the FDIC that had their hands too deep in the real estate market including CRE loans.

The fact that the government is exploring taxing CRE is interesting because it shows the tone of where we are heading.  There is this odd balance of banking power.  As long as you are part of the giant banks and Wall Street power brokers, you can fail on a continuous basis and you will be protected.  Fall out of that realm, and you are in a “free market” with no support.  Not a hybrid system that is conducive to a healthy economy.  And we can see that the amount of defaults with CRE loans are booming:

Source:  MBA

Not exactly a chart that bodes well for a growing commercial real estate market.

More at: http://www.mybudget360.com/

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Budget Crisis Leaves Los Angeles’ $74 Million Jail Empty

Posted By on June 21, 2010

Gross overcrowding in one jail and no money to staff the other one

 

By JOHN ADAMS

The brand new, state-of-the-art Metropolitan Detention Center remains empty because the cash-strapped Los Angeles Police Department lacks the funds to staff it.

The $70 million, 172,000-square-foot, five-floor structure jail is one of the largest of its kind, but because of the city’s budget problems, the LAPD can’t hire enough jailers to operate it, according to the Los Angeles Times.

http://www.nbclosangeles.com/news/local-beat/Budget-Crisis-Leaves-Los-Angeles-74-Million-Jail-Empty-96758834.html

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British Petroleum…….. Gulf Oil Well Update……..Concerns About The Potential For Blowout In The Underground Portion Of The Well

Posted By on June 20, 2010

 

By oilflorida,         June 20th, 2010

Bill Gale, an engineer specializing in fires and explosions on oil rigs who is part of Bea’s Deepwater Horizon Study Group, said the 16-inch wide casing contains disks that are designed to relieve pressure if necessary. If any of those disks popped, it could create undesirable new avenues for the oil to flow.

Bea said there are also concerns about the casing at the seabed right under the blowout preventer. …

In an answer to a question, Bea said, “Yes,” there is reason to think that hydrocarbons are leaking from places in the well other than the containment cap.

“The likelihood of failure is extremely high,” Bea said. “We could have multiple losses of containment, and that’s going to provide much more difficult time of trying to capture this (oil).” …

Bea said BP isn’t sharing enough information for others to know. If there is oil and gas escaping from the sides of the well, it could erode the sediments around the well and eat away at the support for all the heavy equipment that sits above. Bea said reports that BP is using an inclinometer [to monitor the blowout preventer’s tilt] is significant news. “It tells me that they are also concerned,” he said.

http://www.rense.com/

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Pension Payback Time…In Budget Crisis, States Take Aim at Pension Costs

Posted By on June 20, 2010

By MARY WILLIAMS WALSH
Posted June 20,2010

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.

Gov. Pat Quinn said an overhaul would save Illinois’s pension system $300 million in its first year. But the fund is weakened.

Payback Time     Untouchable Benefits

Articles in this series are examining the consequences of, and efforts to deal with, growing public and private debts.

Illinois raised its retirement age to 67, the highest of any state, and capped public pensions at $106,800 a year. Arizona, New York, Missouri and Mississippi will make people work more years to earn pensions. Virginia is requiring employees to pay into the state pension fund for the first time. New Jersey will not give anyone pension credit unless they work at least 32 hours a week.

“We can’t afford to deny reality or delay action any longer,” said Gov. Pat Quinn of Illinois, adding that his state’s pension cuts, enacted in March, will save some $300 million in the first year alone.

To read the entire article, go to:,http://www.nytimes.com/2010/06/20/business/20pension.html

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12 American Warships, Including One Aircraft Carrier, And One Israeli Corvette, Cross Suez Canal On Way To Red Sea And Beyond

Posted By on June 20, 2010

Submitted by Tyler Durden on 06/19/2010   Zerohedge.com

Update: It appears the Aircraft Carrier crossing the Suez is the USS Harry Truman, under the control of Herman “Herm” Shelanski, who is quoted by aish.com as saying “I understood that the strength of the United States is directly proportional to the safety of Israel.”

Arabic newspaper Al-Quds al-Arabi reports that 12 American warships, among which one aircraft carrier, as well as one Israeli corvette, and possibly a submarine, have crossed the Suez Canal on their way to the Red Sea. Concurrently, thousands of Egyptian soldiers were deployed along the canal to protect the ships. The passage disrupted traffic into the manmade canal for the “longest time in years.” The immediate destination of the fleet is unknown. According to Global Security, two other carriers are already deployed in the region, with the CVN-73 Washington in the western Pacific as of May 26, and the CVN-69 Eisenhower supporting operation Enduring Freedom as of May 22. It is unclear at first read what the third carrier group may be, but if this news, which was also confirmed by the Jerusalem Post and Haaretz, is correct, then the Debka report about a surge in aircraft activity in the Persian Gulf is well on its way to being confirmed. There has been no update on the three Israeli nuclear-armed subs that are believed to be operating off the coast of Iran currently.

www.zerohedge.com

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BP Internal Document To Congress….Internal BP Document Confirms Matt Simmons’ Worst Case Prediction Of Spill Rate Of 100,000+ Barrels Per Day

Posted By on June 20, 2010

 
 
BP document…. “If BOP and wellhead are removed and if we have incorrectly modeled the restrictions  the rate could be as high as 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases).” ….. “This number is in sharp contrast to BP’s initial claim that the leak was just 1,000 barrels a day. At the time this document was made available to Congress, BP claimed the leak was 5,000 barrels a day, and told Members of the House Energy and Commerce Committee that the worst case scenario was be 60,000 barrels a day………….IF the seabed collapses, that even Simmons’ estimate will prove to be conservative.
  

 Tyler Durden on 06/20/2010     From Zerohedge.com

An internal BP document released by the chairman of the Energy and Environment Subcommittee in the House Energy and Commerce Committee, Ed Markey, discloses what the vast majority already know – that a “worst case” gusher scenario could be as high as 100,000 barrels of oil per day. According to an exhibit discussing flow rate probabilities, BP says that “If BOP and wellhead are removed and if we have incorrectly modeled the restrictions  the rate could be as high as ~ 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases).” This is getting very close to the estimate presented previously by Matt Simmons that the flow rate could be as high as 120,000 bpd. As Markey notes, “This number is in sharp contrast to BP’s initial claim that the leak was just 1,000 barrels a day. At the time this document was made available to Congress, BP claimed the leak was 5,000 barrels a day, and told Members of the House Energy and Commerce Committee that the worst case scenario was be 60,000 barrels a day. This document tells a different story.” It is stunning to discover that a major multi-national corporation could be so daring as to lie to shareholders, Congress and taxpayers. The next question that Congress may want to look into is why the Obama administration swallowed BP’s lies hook line and collapsing GoM floor bed, without using an independent 3rd party verification, and what the liability to the firm would be if the official flow rate is revised to be twice higher than the current worse case scenario. We are confident that as more of the structural integrity of the seabed collapses, that even Simmons’ estimate will prove to be conservative.

www.zerohedge.com

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Cumberland Advisors – Oil Slickonomics Part 8

Posted By on June 20, 2010

 Everyone should read this!

 

Cumberland Advisors
 
Oil Slickonomics
 
Part 8 – Chemotherapy in the Gulf of Mexico
 
June 20, 2010

“Plaquemines Parish President Billy Nungesser was out on Terrebone Bay at the break of dawn with his new industrial strength, compressed air-powered vac.  Within 15 minutes, he said his crews had collected 55 gallons of oil and Nungesser — vocally frustrated by the response from BP and the federal government — was thinking about whipping out his credit card to pay for more pumps from an online site.” 

 
Meanwhile, the BP president, “After being lambasted in Congress on Thursday … was spending the weekend with his family in Britain’s Isle of Wight. “On Saturday — Day 61 of the oil disaster – Tony Hayward was watching his yacht, a Farr 52 named Bob, compete at the J.P. Morgan Assessment Management Round the Island Race.”  Source: CNN, June 19, 2010
 
Let’s be blunt.  Only one of three presidents “gets it.”  That one is Billy. 
 
President Tony continues to demonstrate that he doesn’t get it.  His congressional testimony proved it.  We wonder how much prep help he got from his fellow BP board member and former US Senator Tom Daschle.  Reminder: Daschle was a prospective President Obama appointee, whose name was withdrawn after financial revelations killed his nomination.  Daschle is the former US Senate leader of his, and Obama’s, political party.
 
The third president is now in deep trouble.  Our national leader faces huge and growing disapproval and repudiation by his core constituency.   “Whose ass to kick” was supposed to be a demonstration of toughness.  It backfired.  Harvard lawyer and Chicago politician Obama is a skilled orator and chooses every word carefully.  This phrase was selected by him to convey some type of forceful political nuance. It failed because it showed Obama out-of-character and therefore suggested that he is a politician first and leader second.
 
The timeline of events starting with April 20 shows that the White House and the Obama administration had conflicting contingency plans and were disorganized.  On April 22, the day the rig sank, President Obama, Homeland Security Secretary Napolitano, Interior Secretary Salazar and others did not know there was a leak.  They were in an emergency meeting together in the Oval Office and were operating without good information.  That is understandable.  What is not comprehensible is why it took them so long to realize the seriousness of their ignorance.
 
It took Coast Guard Admiral Allen to wake them up.  On April 24, Obama’s staff was told there was a meaningful spill.  On April 28, the White House finally accepted that it was big.
 
The president made his first trip to the Gulf a week later and two weeks after the rig explosion.  And he did not immediately activate sufficient federal resources to the level we now know was needed even when briefed by Admiral Allen and Governor Jindal.  That is why Obama is being compared to George Bush and Katrina when the public evaluates the response to crisis.
 
Sorry, Mr. President.  You failed us at the beginning.  You were ill prepared. You announced expansion of offshore drilling because of politics and, we now know that, you hadn’t considered increased research funding for NOAA and for the preventive measures we now know are necessary.  You formed no commission of experts to study it. You failed to heed warnings. And we now know that your administration’s Mineral Management Service was a mess.
 
And we also know that your present moratorium structure is improperly conceived, politically driven and lacks petroleum engineering professional skills.  We also know that your present moratorium plan was discussed in Washington last week with Gulf folks who traveled to our nation’s capitol.  They returned home convinced that Washington is likely to do huge damage to the US by the way you are shutting down existing and non-BP activity.  Your moratorium doesn’t make us safer.  It will make the US dependent on foreign sources for oil to the tune of another 2 million barrels a day as it shuts down the Gulf and if it causes the Alaska pipeline to cease operations for insufficient throughput.
 
The list of bungling is extensive, Mr. President. When looking for asses to kick, you might want to start with the mirror.  But first help me explain the use of this language to my four year old granddaughter after she sees her president demean himself and his office on national television.
 
Let’s get to some very real economic reality. 
 
Five states are now suffering because of the BP spill.  Florida, Alabama, Louisiana, and Mississippi are hit by oil slicks that are devastating their fisheries and tourism.  Texas is a casualty along with the others because the drilling moratorium that was poorly designed by Obama’s team was created out of a political response. 
 
The moratorium payback will be the loss of thousands of jobs. 
 
We now add the Alaska pipeline as a possible casualty, because of insufficient throughput due to the shutdown of existing drilling thousands of miles from the Gulf.  The pipeline is built for 2 million barrels a day capacity.  It currently carries about 700,000 which is near the minimum necessary to operate.  It is supplied by oil drilled offshore.  If it doesn’t maintain sufficient volume of warm oil the oil will cool and congeal.  Five existing offshore wells that would keep the volume sufficient are now affected by the Obama moratorium. 
 
We estimate that an extended moratorium, which we now expect to continue because of Obama political calculus, will cost up to 200,000 higher-paying jobs in the oil drilling and oil service business and that the employment multiplier of 4.7 will put the total job loss at nearly 1 million permanent employment shrinkage occurring over the next few years.  Five states have a regional recession/depression development underway.  Alaska could become the sixth state on the damaged list. 
 
Readers may note that for the Gulf region, they can watch the Beige Books of the Atlanta and Dallas Federal Reserve Banks for economic details over the next several months. 
 
And we must not be deceived by the $20 billion fund.  It is not nearly enough to cover the liabilities that may develop for BP and its partners, who are already in dispute with each other over who is going to pay for what and when and how much.  Remember at $4300 fine for each leaked barrel of oil, the $20 billion is likely to just cover the fine.  We expect that the total cleanup and payment of the liabilities to all injured parties in all five states may approach 5 times that amount.   
 
Let’s get to dispersants. 
 
The United States has approved and is supervising the administration of chemotherapy to the Gulf of Mexico.  I have personally watched chemo too many times.  It attempts to restrain the fast-growing cells by doing more damage to them than it does to the healthy cells, in a desperate attempt to keep the patient alive.  There are many warnings in chemotherapy about longer-term damage and about unknowns.  They are accepted because chemo for a cancer victim is viewed as a life or death option.
 
Dispersants in the GOM are similarly problematic.  Think of them as chemotherapy to a 2000 mile coastline and to hundreds of square miles of sea. 
 
Use them sparingly and on the surface and we have a pretty good idea what will happen – they seem to accelerate evaporation and natural processes that get rid of the oil.  
 
Use them below the surface, however, and we have little experience and simply do not know what the longer-term effects will be.  Oil on the sea floor is a naturally occurring phenomenon.  There are natural processes that Mother Earth has to deal with it.  Microbes eat it.  And when it rises to the surface it is then broken down and evaporates.  Yes, it’s toxic, and, yes, it does do damage. 
 
Dispersants are manmade; no Mother Nature involved in this one.  They are toxic chemicals that can do damage themselves. 
 
When they are used in very cold water and a mile below the surface, we simply do not know what the outcome will be.  And we do not know if the small droplets they create become an emulsion that travels for hundreds or thousands of miles.  There is initial, but inconclusive, evidence that this is happening in the GOM. We will soon find out.  I fear it will be the hard way. 
 
The rest of this commentary consists of quotes from the Obama Administration’s Environmental Protection Agency and other sources.  They were extracted from public documents. 
 
During the GIC meetings in Europe last week there were several discussions on the impacts of the GOM events.  We owe great thanks to Jim Lucier for sharing his insight.  His database on this subject is enormous. 
 
The quotes follow.  They are sequenced and lead to the issue of the use of Corexit.  Remember, about 5 million liters of dispersants, mostly Corexit, have been used in the GOM in the last two months.  About one-third of that has been at the wellhead, 5000 feet below the surface, in very cold, very high-pressure water.  There are numerous reports of deeper-water oil plumes that are sufficiently subsurface to avoid easy measurement and detection.  We will leave the rest of this to each reader to consider for her/himself.
 
As you read these extracts, please note that the UK has now banned Corexit.  British oil comes from the cold and deep water off its coast.
 
 
Copyright 2010, Cumberland Advisors. All rights reserved.
 

Category: Commentary, Commodities, Economy, Finance, National News, Oil and Nat Gas, Wall Street, World News | 48 Comments »
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California School Launches Cell Tower Study About Electromagnetic Effects On Health As Cancer Rates Skyrocket

Posted By on June 19, 2010

By JENN SAVEDGE

 

Mother Nature Network (mnn.com)

Five years ago, Sprint erected an 85-foot cell phone tower in the middle of California’s Vista Del Monte Elementary school. At the time, Sprint studied the tower’s structural safety and an initial power reading, but since then teachers and students have become increasingly concerned about the tower’s electromagnetic effect on health.

The Vista Del Monte tower is 20 feet from classroom buildings and next to the playground and lunch tables. Teachers and staff at the school, in the Victoria Park neighborhood, have expressed concerns about the number of cancer cases that have appeared at the school since the tower was installed. Janet Acker, a retired Vista Del Monte teacher, used to work in one of the classrooms closest to the tower. She has recorded nine current and former staff members who have been diagnosed with cancer. Acker has been diagnosed with thyroid cancer and has spoken to the board of education about the matter in the past.

The school district receives $1,500 a month to house the Sprint cell tower and also uses it for district communication and Internet equipment. Considering the budget crunch that many school districts face each year, that kind of steady income is a big incentive to let the tower stand.

Still, school officials are listening to the concerns of staff and students. This week, school officials will launch a $15,000 independent review to study the electromagnetic waves coming from the cell tower, particularly looking for any irregular electric waves, or “dirty power.”

You can bet that many school districts nationwide will be eager to hear the results.

Jenn Savedge has written three books on eco-friendly living. Read more on her green parenting blog: www.mnn.com/featured-blogs/greenparenting.

Read more: http://www.kansascity.com/2010/06/14/2015582/california-school-launches-cell.html#ixzz0rKe6n83q

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In The Gulf Of Mexico, Progress Is Being Made

Posted By on June 19, 2010

More ships are on the way……


Sometime in the next 10 days, the Helix Producer processing ship is due to arrive on the scene – and start pumping up 20,000 to 25,000 barrels (840,000 to 1.05 million gallons) of oil daily from yet another line connected to the Gulf of Mexico well’s broken blowout preventer. That will provide a huge boost to the oil-capture capacity. It’s even conceivable that BP could discontinue the Q4000 oil-burning operation, if the output from the broken well is toward the low end of the current estimates (35,000 barrels leaking per day). By mid-July, still more processing ships (including the Toisa Pisces and the Clear Leader) will be collecting oil. The capture capacity would rise to 60,000 to 80,000 barrels a day, which would cover even the most dire estimates to date. By mid-July, the cap on the blowout preventer and the hookups to the well would be replaced with equipment designed to weather the hurricane season.

Oil spill 

BP

This diagram shows how the oil-capture operation should look by mid-July.

More at:http://cosmiclog.msnbc.msn.com/_news/2010/06/18/4528626-oil-suckers-running-at-full-tilt

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In The Gulf Of Mexico, The EverGreen Burner, $700,000 Worth Of Petroleum Goes Up In Smoke Every Day But Is Seen As The “Safest Option”

Posted By on June 19, 2010

Can burning oil be ‘environmentally friendly’?


At current crude-oil prices, that burn rate suggests that $700,000 worth of petroleum is going up in smoke every day. Admittedly, it’s not your usual “smoke.” BP is using in a smokeless atomizing burner that is supposed to be more environmentally friendly than the usual equipment. However, the EverGreen Burner still carries an environmental cost. A report from Total E&P UK, prepared for North Sea drilling operations, says high-efficiency green burners are the “safest option” for burning oil, but they nevertheless produce irritating ozone, sulfur dioxide, greenhouse gases and nitrous oxides. Fallout from the burn can drift several miles (kilometers) away, according to the environmental study. The burning is said to pose a “moderate risk” to the environment – and that’s upsetting to some activists. But in BP’s view, at least, the risk is outweighed by the benefit of keeping that much more oil out of the gulf while reinforcements make their way to the site.

More at:  http://cosmiclog.msnbc.msn.com/_news/2010/06/18/4528626-oil-suckers-running-at-full-tilt

Category: Commentary, Commodities, Economy, Finance, National News, Oil and Nat Gas, Technology, Tid Bits, World News | No Comments »
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Countries With The Biggest Households

Posted By on June 19, 2010

Gee, what happened to China?

Biggest Households

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The Countries With The Most Billionaires

Posted By on June 19, 2010

Most Billionaires

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Greenspan Says U.S. May Soon Reach Borrowing Limit

Posted By on June 18, 2010

By Jacob Greber         June 17, 2010

Former U.S. Federal Reserve Chairman Alan Greenspan testifies at a hearing of the Financial Crisis Inquiry Commission in Washington. Former Federal Reserve Chairman Alan Greenspan said the U.S. may soon face higher borrowing costs on its swelling debt and called for a “tectonic shift” in fiscal policy to contain borrowing.

“Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website. “Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said.

Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger, entering a debate among global policy makers about how quickly to exit from stimulus measures adopted during the financial crisis. U.S. Treasury Secretary Timothy F. Geithner said this month that while fiscal tightening is needed over the “medium term,” governments must reinforce the recovery in private demand.

“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” said Greenspan, 84, who served at the Fed’s helm from 1987 to 2006. “Incremental change will not be adequate.”

Pressure on capital markets would also be eased if the U.S. government “contained” the sale of Treasuries, he wrote.

“The federal government is currently saddled with commitments for the next three decades that it will be unable to meet in real terms,” Greenspan said. The “very severity of the pending crisis and growing analogies to Greece set the stage for a serious response.”

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Medvedev Sees Chance For New World Order….Russia Pushes for New Reserve Currency

Posted By on June 18, 2010

By Catherine Belton, Charles Clover and Courtney Weaver in St Petersburg

Published: June 18 2010

Dmitry Medvedev, the Russian president, said Moscow was bidding to help lead efforts to build a new world economic order after the old system collapsed in the global financial crisis.

Opening Russia’s annual economic forum in St Petersburg where hundreds of global chief executives have flocked, Mr Medvedev said the renewed interest in Russia this year was a sign of a changing world in which the institutions of the western-dominated world order had had their day amid thousands of corporate defaults and the threat of sovereign defaults.

“What had seemed untouchable has collapsed. The bubbles that created the illusion of flourishing economies have burst,” Mr Medvedev said. “For Russia this situation is a challenge and an opportunity. We are living in a unique time. And we should use it to build a modern, flourishing and strong Russia … which will be a co-founder of the new world economic order and a full participant in the collective political leadership of the post-crisis world.” .
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Category: Commentary, Economy, Finance, National News, Wall Street, World News | 46 Comments »
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Letter From The President To G-20 Leaders

Posted By on June 18, 2010

From President Obama: Letter from the President to G-20 Leaders

Our highest priority in Toronto must be to safeguard and strengthen the recovery. We worked exceptionally hard to restore growth; we cannot let it falter or lose strength now.

This means that we should reaffirm our unity of purpose to provide the policy support necessary to keep economic growth strong. It is essential that we have a self-sustaining recovery that creates the good jobs that our people need. In fact, should confidence in the strength of our recoveries diminish, we should be prepared to respond again as quickly and as forcefully as needed to avoid a slowdown in economic activity.

He also cautioned about global imbalances:

A strong and sustainable global recovery needs to be built on balanced global demand. Significant weaknesses exist across G-20 economies. I am concerned by weak private sector demand and continued heavy reliance on exports by some countries with already large external surpluses. Our ability to achieve a durable global recovery depends on our ability to achieve a pattern of global demand growth that avoids the imbalances of the past. … I also want to underscore that market-determined exchange rates are essential to global economic vitality. The signals that flexible exchange rates send are necessary to support a strong and balanced global economy.

Obama was clearly writing about China.

Obama argued for stimulus now – while the economy is weak – and fiscal discipline over the medium term:

We need to commit to fiscal adjustments that stabilize debt-to-GDP ratios at appropriate levels over the medium term.

More at: Letter from the President to G-20 Leaders

Category: Commentary, Economy, Finance, Interest Rates, Bonds, National News, Wall Street, World News | 755 Comments »
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