Based on my own extensive analysis of the ongoing financial crisis, I've come to the following conclusions:
- Nobody clearly understands how we got in this situation.
- Nobody clearly understands what situation we are in.
- Nobody clearly understands what's going to happen next.
- Despite all this, every single human being with access to a keyboard and a website is willing to make a mockery of the profession of journalism by making confident pronouncements.
Not me. I'm just a blogger, so I'm happily willing to admit my comparative cluelessness. I'll just throw a few things out there for discussion.
Oil spiked up today to $130 a barrel -- the largest one-day jump in price ever. Why? According to Bloomberg, it's got something to do with a "squeeze play." OK. According to energy consultant Jim Ritterbusch, "There's a renewed scramble for commodities because of a general weakness in the dollar." Over at WSJ, Keith Johnson hints that the rising price of oil will squash all the eco-talk from politicians. Of course, he predicts the same thing when the price of oil is low, so ...
Meanwhile, apparently Emperor Paulson is planning on ponying up some $700 in taxpayer money to bail out banks, with few strings attached and virtually no measures to help out the little guy. A blank check for $700 billion to the Bush administration? What could go wrong?!
At the current rate of U.S. government spending on renewables, $750 billion could pay for 375 years of renewable R&D. Green groups are starting to speak up -- Friends of the Earth just released a statement opposing the bailout. Sierra Club's Carl Pope is raising tough questions as well.
What will the financial crisis do to the availability of capital to fund cleantech projects? We're going to have more on that later. In the meantime, amid the musings over here on VentureBeat, Steve Perlman of "research-focused investment company" Rearden says, "We're seeing particular interest in market segments which benefit when consumers and businesses are forced to cut costs ... For example ... green/cleantech (high gas prices combined with social awareness of global warming/political instability issues)." So maybe all this uncertainty could help cleantech? We'll see.
A final note: I don't ever want to hear again about how expensive renewables are. If we have $3 trillion for a pointless war and $750 billion to clean up the messes made by biz school grads playing with funny money, we by God have enough money to get off fossil fuels. It's a matter of will, not cost.
Why buying cheap energy certificates worsens climate change
‘Heretic’ battles straw man
Comments
View as Flat
Spence Posted 7:22 am
22 Sep 2008
Price of the foreign oil America buys annually from various terror-coddling despots and vulgar plutocrats: 700 Billion.
Price of the damage that oil does to the environment: Priceless. Literally.
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Pangolin Posted 7:33 am
22 Sep 2008
What we get for 750 billion is back to zero (if we're lucky) with the same clown circus in charge.
Put the Carbon Back
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Tom Philpott Posted 7:49 am
22 Sep 2008
What? No!!!! Seriously, listen to Alex Blunberg's recent This American Life Report called "Giant Pool of Money."http://www.thislife.org/Radio_Episode.aspx?sched=1242
Long story short: Wall Street convinced itself that housing prices always go up, no matter what. (Just like tech stocks go up, until they stopped in 2000.) Based on this comically faulty logic -- which I doubt few top execs believed, unless they're literal imbeciles -- they rigged up a novel "product" called "mortgage-backed securities," essentially vast clumps of mortgages. Selling these "safe," triple-A rated, solid-yielding securities was so profitable that they wanted more, more, more. So they completely gutted the requirements for loaning money for mortgages -- and then proceeded to bundle these dodgy mortgages into more "safe," triple-A rated, solid-yielding securities. Didn't they worry that folks making 40k a year and buying 400k houses would default? Sure, but they crossed their fingers that today's 400k house would fetch 500k next week. Rather than holding a loan in the case of default, the mortgage-backed security would now hold a house that could be sold at a tidy profit. But they knew what they were doing carried enormous risks. And then the housing market did what it wasn't supposed to do, ever: it contracted. And the economy soured. And when people started to default on those 400k mortgages, guess what? They were only fetching 300k on the market. So the whole absurd house of cards began to crumble. And all the crappy debt these banks had sold to each other (at enormous fees) began to dive in value -- and the banks scrambled to flip it yet again. But this time, everyone was suddenly too smart to buy -- until Paulson stepped in and offered to buy all that worthless junk with your money. So we get the crappy debt, without the fat fees. Get it now? By all means, let's scratch our heads about what will happen; we're not seers. But we're not dolts, either. Let's not let ourselves be confused, dazzled, and flummoxed about what just happened. We got mugged.
Yes, the world runs on credit, and credit was threatening to seize up, risking a global depression. Something had to be done. But let's make sure this vast bailout results in real oversight over financial markets.
Victual Reality
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GonzoDon Posted 8:09 am
22 Sep 2008
I love it. It's so true. When oil and gas prices are high, consumers are suffering, so for god's sake we've got to open up ANWR to drilling, cut gas taxes, release oil from the strategic reserve, set the drilling companies loose on our public lands will all due haste, yadda yadda yadda.
Conversely, when oil prices and gas prices are low, the consumer economy hums along on the happy-motoring model and by gar we can't afford to upset that applecart with environmental concerns like demanding increased fuel efficiencies (we don't need it! gas is cheap!), investing in public transit (no one will use it! gas is cheap!), building more compact and pedestrian-friendly communities (it's pointless! people want to drive everywhere including their remote suburban mcmansions! gas is cheap!). Yadda yadda yadda.
Good observation, David Robers. So true!
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gmobus Posted 8:42 am
22 Sep 2008
That's it. We can grow the economy (create jobs, produce more stuff, all have a merry time) by simply pumping more oil, digging more coal. What a great idea!
But then oil production started to tail off. It was still rising but not as fast. We pumped energy into the economy as if we would always be able to boost production of energy in the future. Only now we can't. Yikes! How are we going to keep the economy growing in the future? How are we going to pay back for the fact that we were not investing in other energy sources which might have produced more net energy in the future?
We borrowed energy to make bigger houses, bigger cars and SUVs, bigger TV sets so we can all feel like we are sitting in a movie theater, bigger sports arenas, more highways, more people, more, more, more. Just not more energy production capacity.
Give me a break. I agree with you that not that many people really understand what has happened. But they should. You cannot do any work without energy. And if you don't channel some of that work toward creating renewable sources of energy (appropriately scaled) and you are totally dependent on a diminishing source of energy, what else could you expect. We're screwed.
Unless some bright bulb figures a way around the second law of thermodynamics you can expect both economic contraction (as in depression) and --- wait for it --- inflation (as measured in fiat monetary units). If you thought stagflation was bad just wait to see how contractflation suits you.
It's right around the corner, coming to an economy near you. If my understanding (outlined above) is wrong then it won't happen. Maybe we'll have a few years of stagflation/recession and then happy days will be here again. But if I am right...
Question Everything
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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vakibs Posted 9:29 am
22 Sep 2008
.. and there will never be any contractflation.
@George Mobus :
You should be aware of this 2006 article in the scientific american.
More information on breeder reactors.
Let's think in terms of eco-dollars.
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gmobus Posted 11:59 am
22 Sep 2008
Nuclear will be part of the future. But any future that assumes we will be able to support the current population in the style to which we have become accustomed is delusion, friend.
DO THE MATH.
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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amazingdrx Posted 3:14 pm
22 Sep 2008
If enforcement returned it would dissipate. There, that's a bold pronouncement. Nabbing Martha Stewart (because she was a dem fundraiser)did not put the fear in the perps.
Unlike pronouncements of affection for "Reason", and their free marketeerian think tankery, this one is not as likely to be embarrassing, later on.
Mock me if you dare. Oh, cowardly corporate libertarians.
Everyone prestending they don't know how we got into this. With their valiant propaganda as a lobbying aid.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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GreyFlcn Posted 4:41 pm
22 Sep 2008
In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch
http://www.huffingtonpost.com/2008/09/22/dirty-secret-of- ...
Didn't we get into this problem in the first place because of a lack of oversight, and a lack of regulation.
-David Ahlport
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vakibs Posted 7:37 pm
22 Sep 2008
Infact, we have sufficient energy to support more than the current population, and at lot more lavish lifestyles.
But this is not an excuse to not conserve energy, to not reduce the populations in the long run, and to not care for the environment.
The PDF that I linked above is still working (It is a December 2005 SciAm article archived at another website).
Let's think in terms of eco-dollars.
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KenG Posted 10:59 pm
22 Sep 2008
Also, this bail out seems to be viewed as real money. It's not. True to form, the bail out money won't come from other sources, it will just increase the deficit. I can't imagine that whatever action is being taken will actually impact taxes or other spending. The most likely effect will be a small long term increase in inflation. Also, the Federal government will be buying "stuff" (bankrupt companies and questionable loans). There will be some equity value and no one can predict the ultimate "cost" of the bail out.
Ordinarily I would be opposed to Federal involvement here, but in this case I think the Feds were involved in breaking the system and need to be involved in fixing it.
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John former Marine Posted 11:56 pm
22 Sep 2008
And as for my job....working is overrated anyways. I know you Boomers love doing it...you designed a society for your kids to enjoy where we get to drive 1 or 2 hours to work at a boring job then drive 1-2 hours back home again to watch TV. I'm not really into it, personally. If the economy crashes and I have to leave my comfy little townhouse, I'll move in with my little brother, who I just helped buy a very well-priced home...a trailer.
Il faut cultiver notre jardin.
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vakibs Posted 4:17 am
23 Sep 2008
@David Roberts
You should know that the US senate has recently zeroed on GNEP (global nuclear energy partnership) funding. This is perpetrated by the supposed defenders of environment and human safety, whereas the funding is vital in the R&D of three important problems
How to get rid of our nuclear waste ?
How to solve our energy crisis ?
How to avoid terrible famine and mass human murder in the future due to sinking water table and rising sea-levels ?
The senate has cut down the funding to zero for all the projects which are demonstrating "existing " technology, which is already sufficient to solve all our energy and environmental problems.
This stupidity has to stop ! If the Clinton administration has not taken its bone-headed decision of discontinuing the IFR project in 1994, we would not have been seeing the rapid coal-plant build up in China, India and Africa. Sacking the funding for GNEP is an equally monumental blunder.
So what is GNEP ?
It is a program to close the loop in nuclear power production. This will be done by breeder reactors which (a) don't produce nuclear waste and eat up the existing nuclear waste (b) are better resistant to proliferation and are safer than existing 2nd generation nuclear plants.
Why would such a nice thing be discontinued by the government ?
Because, general public is not aware. Special interests which have ties to coal and natural gas industries are stifling the scientists.
Please do the environmentalist community a service and report on this travesty.
Let's think in terms of eco-dollars.
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vakibs Posted 4:23 am
23 Sep 2008
The vital importance of GNEP : Several countries in the world are already building breeder reactors, and if their Uranium/Plutonium (say in Pakistan) runs loose, the bombs will explode in New York. GNEP actually addresses these dangers and helps the cause of non-proliferation.
Read the book of Tom Blees.
Let's think in terms of eco-dollars.
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