Archive for February, 2011

Eric Sprott makes the case for silver. “There’s nothin’ left.”

Key points:

  • GDP is not profit and the debt is still debt
  • U.S. bailout spending from 2007-2010 = 7.9 trillion (other countries have done similarly)
  • Calls period from 2000-2010 “a depression” based on home and car sales
  • Despite what they say on cNBC, gold is a currency
  • Gold up nearly 300% as valued in dollars, pounds, or euros in the past 10 years. “Stunning.”
  • How can gold be in a bubble if it represents less that 1% of portfolios world-wide?
  • Silver is Sprott’s biggest investment, calls diversification “di-worse-fication.”
  • Silver demand vastly higher than supply. “There’s nothin’ left.”

My take home message: What happens to silver price when there’s fewer and few sellers and the paper traders (JPM, HSBC) get routed?

Silver is going to move in a volatile fashion. Hang on.

I’m planning on buying the dips when I’m able.

 

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Thorium: the first thing I’ve felt optimistic about in months…

Over-population, peak oil, ecological destruction, resource depletion, economics and political tyranny are common topics on this blog.  I know, what a rosy little bunch of themes!  So rosy in fact, that friend of mine recently said to me, “You know, if I ever get too happy or optimistic, I just read your blog.  It’s like a total downer, man.” I’m not sure I should take that as a compliment or not.  Er…probably not.

Yes, I do have a penchant for downer kinds of topics.  I mean that’s what cynics do, right? The burst your bubble. Perhaps within the soul of every cynical skeptic, however,  beats the heart of a disillusioned optimist.  That’s true of me anyway. Even at my most frustrated, angry and cynical best (or worst, depending on your point of view), I still believe in safeguarding and encouraging all that is good, true and beautiful in this world. Otherwise, what’s the purpose of even living?

I hope for a more just, content, and peaceful world. That hope is the spark that keeps me working, raising my kids, and learning something new everyday.

Well, on to my topic today.

I’ve put in a bit of time in studying our energy problems the past few months.  I’ve looked at all the facts.  As usual, the facts are somewhat depressing.  Stubborn things facts are.

Here’s my summary statement:  If we don’t find something other than fossil fuels to run this planet, we’re screwed.

Why might you ask?

  • Our current infrastructure was built by and for oil. What happens when it’s not cheap and plentiful anymore?  Have you really stopped to think about that?  In addition to being out of gas, we’ll also have to deal with “infrastructure momentum”.  That’s not going to be easy. For example, how well do you think the suburbs of Phoenix are going to work without cheap gas and cars? This sort of scenario could be upon us sooner than you think. Our infrastructure won’t work so well. A lot of our cities and town are going to feel like heroin addicts with no fix in sight.
  • Fossil fuels (oil, natural gas, coal) are wrecking the planet. I’ve read a lot about the whole global warming issue. It’s been tough. There a lot of political mumbo-jumbo and propaganda surrounding the issue. Bottom line, however, is that there’s a shit-load of CO2 getting pumped into our atmosphere and every day there’s less forest left to absorb it. The facts show that greenhouse gases are a likely contributing cause to global warming. Yes, the sun is doing most of it, but human activity is exacerbating the problem.
  • Coal is dirty. Oil is dirty.  They pollute our air. This is not healthy for us or the ecosystem.
  • The planet cannot support 9 billion people (2050 estimate) without oil. Without the energy from fossil fuels a lot of people are going to suffer.  This is not some Malthusian delusion of mine.  Oil is used in planting, harvesting, and transport of almost all foodstuffs,  not to mention its use in fertilizer and insecticides. I’m not necessarily a big fan of industrial agriculture, but it is feeding a lot of people. Nevertheless, it can run without oil.
  • As far as peak oil is concerned, I think we’re probably past peak already. Despite this, no one really has a plan for what to do when less oil is available with each passing year. As they say, if you fail to plan, you plan to fail. (Epic fail alert, epic fail alert, epic fail alert.)
  • We fight too much over the stuff. A lot of wars are fought for oil. I’ll leave it up to you to decide which ones.  Countries that are dependent on oil will fight over it as supplies dwindle.

LiFTeRs (short for Liquid Fluoride Thorium Reactor), in concert with other renewable energy sources, could help us avoid a big, nasty crash as I’ve outline above.  This is one of the technologies that could really help. It gives me reason for optimism anyway.

I’m all for a controlled decent down the far side of Hubbert’s curve. Aren’t you?

Here’s a good introduction to Thorium as a fuel:

Here’s a shorter version for those of you with shorter attention spans:

A few helpful links, too:

The Thorium Energy Alliance

Thorium: via Wikipedia

Here’s a little historical tidbit. They built and tested thorium reactors at Oakridge National Laboratory as part of the Manhattan Project. Although the thorium reactors were safer and less expensive than the “fast-breeder” reactors at the time,  they fell to the wayside because they yielded far less plutonium.  Because Uncle Sam and the MIC needed a lot of plutonium for A-bombs, the Thorium reactor idea never really caught on.  Bummer, that might have saved us a lot of trouble.

Jeffery Sachs slams Democrats and Republicans on “unrealistic budget”

Summary points:

  • Both parties are cutting back on services for the poor
  • Tax cuts for the rich won’t help balance the budget
  • Sachs says history shows that Laffer curve is nonsense
  • Both parties financed by the wealthy
  • Sees a decline in American power
  • U.S. infrastructure crumbling
  • Policy being driven by wealthy people and corporations
  • Civilian “discretionary” portion of the budget (education, science, infrastructure) dwindling as entitlements, military spending, and interest payments take over most of the budget
  • America’s leaders ignore problems of energy, climate problems,  and food instability
  • Politics dominated by campaign finance

Are these guys total nut-jobs…or mostly right?

Chris Hedge’s points:

  • there are no major institutions in U.S. today that are genuinely democratic
  • a form of “inverted totalitarianism” now controls America, not via an individual dictator, but through a mostly anonymous corporate state
  • coup-de-etat in “slow motion” occurred; corporations used the media and the iconography of patriotism and the Constitution to corrupt the levers of power to such an extent that the citizenry is now “impotent”
  • liberals and conservatives now pay fealty to the corporations
  • Bush and then Obama destroyed national and international law with invasion of and continued war in Iraq (loss of habeas corpus,  bypassing of “just war” theory, pre-emptive war etc.)
  • it’s now a waste of energy to engage in electoral politics because it’s rigged
  • Obama administration is a “poster-child” of the “craven hypocrisy” of the liberal class:  they’ve walked out on women’s rights, allowed spying and targeting of U.S. citizens, kept Guantanamo camps open, continued borrowing to support wars etc.
  • U.S. is now an oligarchic state
  • the enemy is Wall Street
  • Tea Party and Libertarian anger is purposely steered away from Wall Street and toward government in general and Obama in specific, also towards Muslims and immigrants
  • only non-violent way to resist the corporate superstructure is by going local: gardens, local business, get off grid, local government, etc.
  • U.S headed for “really rough times”
  • ecosystem is in trouble: liberal agenda failed at Copenhagen, basically killed Kyoto accords, he states Americans are living in twilight world of electronic hallucination “characteristic of dying civilizations”
  • liberal establishment was formerly a “safety valve” within a functioning democracy by making change and reform possible through official channels and by discrediting radicals, Chris states that such a safety valve no longer exists
  • “news” is not the same as truth
  • corporate assault has dismantled and corporat-ized the traditional “liberal strongholds”: the press and universities, institutions which are now powerless to change society
  • both parties now completely dependent on corporate money to stay in power
  • the permanent war economy fostered by Wall Street and Madison Avenue is justified through emotion laden propaganda: fear of enemies, foreign and domestic
  • press missed the nexus of the recent financial crisis and actually furthered the propaganda of the “criminal class” by becoming stenographers for the perpetrators on Wall Street (What’s wrong with the economy? Let’s interview Robert Rubin. He’ll know.)
  • internet propels people towards “intellectual ghettos”
  • no ethic of “reality based facts” in blogosphere
  • the “Church” was run over by the Christian fascists (killing Muslims in Iraq is okay gang) and corporate Christians (Jesus wants you to be rich gang)
  • comfort and career-ism mutes people’s natural response to evil and falsehood
  • action tips: get out of consumer culture, focus on moral imperatives over political expediency, change via bottom up activism
  • profile of typical politicians: they’re either mediocre (Obama) or venal (Bush)
  • Mr. Hedges worries about a future “violent right-wing backlash” and “totalitarianism”

Michael Hudson’s points:

  • the corporate and banking power structure favors a depression in U.S. as an excuse to lower wages by 20% in a “vain” attempt to make the economy more viable and themselves richer
  • Wall Street bankers and corporations (Obama’s financiers) are parasites, feeding off a host (the U.S. economy)
  • financial sector wants to hog all available money to bail out banks instead of helping working people
  • U.S. government’s and citizenry’s inability to pay debts = game over, means banks and corporations likely to look elsewhere for profits
  • Federal Reserve wants to re-inflate a housing bubble and in so doing, push middle class into eternal debt, essentially positioning them “one paycheck away from homelessness”
  • U.S. bailout money was reinvested by finance sector, not in U.S., but in emerging markets
  • finance capitalism stifles the industrial economy  because all the surplus goes to the banks, instead of being reinvested in the “real” economy
  • parasitic bankers will feast on the current host (USA) until it dies, then move on to greener pastures (BRICs and Asia)

Big ‘Sis wants you to report anything strange while you’re at Walmart

I’m pretty sure this is not what Washington and Jefferson envisioned.

Bernanke to Egypt and Tunisia…”Let them eat cake!”

Bernanke takes credit for rising stock market prices, but not crazy high food prices. Seriously?  I guess he doesn’t want to admit he has blood on his hands.

Contrary to what gets blathered about on CNN, the cost of food is the primary impetus behind unrest in Tunisia and Egypt. Though they claim otherwise,  Bernanke, the TBTF banks, and speculators are causing food prices to climb higher and higher.  Price spikes are a direct, if delayed result, of reckless money printing.

Who does this hit the hardest? The poorest 1 billion on the planet, obviously.  In reality, the world’s poor are now paying the price for the bailout of the TBTF banks in 2008/2009, QE1, and QE-lite.

Think of it. If you’re spending all of your income on food to survive, if prices go up even 5-10%, let alone double, you’re gonna be hungry and damn pissed off. See Egypt and Tunisia. Tomorrow it could easily be Pakistan, Indonesia, Haiti, or India. What we’re seeing now are the effects of the bailouts and QE1. We’ll see the effects of QE2 later this year and next.

It’s not gonna be pretty folks.

Some claim that it’s demand that driving prices higher. I say not so fast. If you look at the BDI index, you can see that demand has been fairly flat, or even falling that past 3 months or so. It’s not a perfect indicator, but you’d think that if there truly was a screaming demand for dry shipping goods (read grains) around the world, the index would at least blip up, not down.

Weather has played a role too, as floods, fires, and droughts destroyed vital crops. (Personally, I worried about honey-bee populations as well.) Weather being what it is, however, I think that a flat BDI indicates that the higher price of food is mostly from beaucoup dollars chasing every apple, orange, and grain of rice, courtesy of Bennie and the Feds.

The Bernank is lying through his teeth. He knows damn well that flooding the globe with newly printed money is gonna get people killed.

“Ben, the peasants have no bread,” we say.

His response it seems, is simple: “Let them eat cake.”

Dangerous conflagrations – Egypt and beyond

One of the more predictable indicators for violence is this:  when an honest man can’t afford to put a roof over his head or to put a basic meal on the table for his family there’s gonna be trouble.

This has happened in Tunisia and Egypt and could spread to European countries with weak “safety nets.” The contagion is also very likely to spread to other countries where a high percentage of income is spent on necessities: Pakistan, China, and India, etc.

We’re seeing the beginnings of an inevitable political and economic conflagration due to:

  • food supply chain instability due to peak oil and unstable weather
  • insane increases in oil and food prices
  • a bank insolvency crisis that’s now morphed into a sovereign debt crisis in many nations
  • lax fiscal responsibility and inflationary monetary policies
  • tension due to widening income disparity
  • institutional corruption and dominance of global corporations
  • political instability due to the waning hegemony of the United States and the dollar

Other than that, everything is hunky-dory.

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