a broken cpu

The part is in the mail and will hopefully arrive on Monday.

Until then please follow the linked blogs below and to the right. 

It hurts me more than it does you.

Looking toward the Hariri Indictments

Well it seems like we have been waiting a long time and we are still waiting for the Hariri Report and the indictments which will follow.  The latest idea seems to be that the final report will come December 10-20 with indictments to follow.

In short, the concern is that Hezbollah will use the indictment of its members and leadership as a cause de bello and attempt to seize de facto control of the state.  Hezbollah is adequately armed for just this possibility in addition to new capabilities to threaten Israeli population centers.

Hezbollah will not act without the consent of its primary patron, Iran.  The problem, however, is that if we believe what the Iranian leadership says, they may have very good strategic and rhetorical reasons to want to see Hezbollah gain even greater autonomy within Lebanon.

Syria is already acting like an Iranian vassal, serving the diplomatic and military aims of Iran in its dealings with the West, being a conduit for shipping banned items into Iran, as well as serving as a conduit for arms to Lebanon.  Iran's threats toward Israel are well publicized and its use of proxies to lash out physically at rhetorical enemies well practiced.  Anything which gives Hezbollah greater freedom of movement serves the interests of the leadership in Tehran. 

The future is open.  We do not know what it holds.  The next step in the Eastern Mediterranean, however, should start to make itself known in the relatively near future.

In other news, demonology seems to be making a sort of a comeback, though perhaps not in the way one would first think.

SCIENTISTS are not, in their own imaginations anyway, much given to myths. There is one mythical beast, though, that has haunted physics for almost 150 years. In 1867 James Clerk Maxwell, a British researcher, wondered if you could extract useful energy from thin air, in apparent contradiction to the second law of thermodynamics. He posited the existence of an all-seeing homunculus that might do so—a homunculus that was almost instantly dubbed “Maxwell’s demon”.

Demons of another sort continue to haunt the dreams of security planners around the world.  While the Mumbai attacks are recent enough to still resonate in our minds, I always use the opportunity to remind the strong of stomach to remember a previous attack that was, in many ways, more disturbing.

It took the 10 terrorists just 10 minutes to overwhelm Mumbai's defenses when they struck in November 2008. They were organized in five two-man teams, and the first waded into the crowd at one of India's biggest railway stations, firing AK-47s and tossing grenades. Soon more than 50 people were dead, a hundred more wounded. While this was going on, three other teams got out of cabs in other parts of the city and walked into two luxury hotels and a swanky restaurant, letting loose with guns and grenades. A fifth team stormed a Jewish community center, killing people and taking hostages.

Closer in time and geography America continues to practice the Politics of Avoidance when it comes to the banal yet very real threat of our unsustainable fiscal path.  It is hard to see how this ends well.  It is hard to see how we become the kind of people able to face these problems like adults.

Our political culture prefers delusion to candor. Liberals would solve the budget problem by taxing the rich and cutting defense. Think again. The richest 5 percent already pay about 45 percent of federal taxes; they may pay more but not enough to balance the budget. Defense spending constitutes a fifth of federal spending; projected deficits over the next decade are similar. We won't shut the Pentagon. Republicans and tea partiers think that eliminating "wasteful spending" would allow more tax cuts. Dream on. The major spending programs, Social Security and Medicare, are wildly popular with roughly 50 million beneficiaries.

Case in point, Paul Krugman continues to be even more vocal than normal in his denunciation of any attempts to articulate let alone address the problem of our national and private debt.  I haven't read anything which denies the nuance which exists in the real world with greater self-assurance since George W. Bush left office.  I am sorry to say that I find the dear economist less helpful and more a political hack with every passing day.

Me, I'm busy "gettin' my share done."  Weeds may be part of the curse but good work is a blessing.  i have every intention of being that mule that has "work left in him yet."

The real lesson of the Euro's ill health

The new's cycle is filled with stories of describing the symptoms of the Euro's ills.
Who bails out the "bailer outers?"

Europe stumbles toward 1931

Ireland denies seeking a bailout

and this uncertainty is not without effect.  As we witnessed during the Greek crisis the dolloar is experiencing a bit of a rally on rumors of the Euro's ill health.  Money seeks the place where it will be treated best and in a time of uncertainty regarding the Euro the dollar looks like a safer bet.  What we need to keep in mind is that "safer" is a relative term and not an absolute.

The problem, as I see it, is that those of the political establishment who believe that deficiets, effectively, do not matter, take this development as evidence of the right-ness of their claims.  If we are in so much risk of rapid inflation, they ask, why is the value of the dollar increasing?

Many of the world's investors are treating the dollar like the least bad currency bet.  Like the young woman who marries the least-bad young man in her small town, the marriage can fall apart rather suddenly once circumstances change.  The dollar is increasing in value not because it is healthy but because the Euro is more sick.

Buoyed by the midguided belief that defecits do not matter, policy leaders are likely to carry forward mis-guided policies even farther.  The problem is that sooner or later our abuse of the dollar will need to be addressed.  The more damage done to the currency in the meantime will result in a larger mess to pick up when the Day of Recking finally arrives. 

The Dollar might experience a bit of a rally but do not mistake it for a recovery.  The price of commodites might decrease but that is not necessarily a new trend.

Feeling Snarky

I'm doing a lot of pay work and not sleeping that much so I'm reading through the news feeling a little snarky.  Please excuse my the poor behavior I am about to demonstrate.

EU Energy Chief: "Yeah, oil availability is probably down hill from here."

The availability of oil worldwide has already peaked, the European Union's energy chief Guenther Oettinger said on Wednesday.
"My fear is that the global consumption of oil is going to increase, but European oil consumption has already reached its peak. The amount of oil available globally, I think, has already peaked," Oettinger told a news briefing in Brussels.

So back when I was talkin' to ya'all regarding the science of oil field depletion and how this was in our future and I got the response, "The people who do that for a living say supplies will keep on growing for 40 more years."  We'll the appeal to authority isn't working any more.  If you want to talk about peak oil what the authority figures might be telling you in another 5 years, drop, bring some good coffee and donuts (Apple Fritters please) and we'll talk about it.

National Geographic

According to the 25-year forecast in the IEA's latest annual World Energy Outlook, the most likely scenario is for crude oil production to stay on a plateau at about 68 to 69 million barrels per day.

For this most likely scenario Iraq triples production and tar sands everywhere are scooped up and boiled in about every drop of fresh water there is.  So guess what?  The IEA is still only acknowldging what it has to and doing backflips to put lipstick on a pig.

60 Minutes seemed to go out of their way to make it sound like fracking shale for natural gas was going to save us all.  Last time I checked i couldn't buy Natural Gas at my local BP station (owned and operated by a nice local couple) and even if I could I could not buy a car to put it in.  Please, do not get me started on how long it takes to swap out the car fleet or adapt current vehicles to run on natural gas.  People who are defaulting on their home loans and collecting unemployment don't have cash for that.

Oh, and then there are the natural and financial realities beneath the spin.

What they miss is that production decline rates are so high that, without continuous drilling, overall production would plummet. There is no doubt that the shale gas resource is very large. The concern is that much of it is non-commercial even at price levels that are considerably higher than they are today.


Recent revisions to SEC rules have allowed producers to book undeveloped reserves that questionably justify development costs based on their own projections in public filings. New reserves are being booked at the same time that billions of dollars in existing shale gas development costs are being written down because the projects are not commercial. Concerns about the logic of ongoing gas-directed drilling while prices collapse have been partly diffused by a shift to liquids-rich plays like the Eagle Ford Shale in Texas. These new ventures, however, produce significant volumes of gas which is partly why gas prices continue to fall.

And lets not forget that in an age where we all burn oil to get to work and to get food to our tables, the financial lives of BILLIONS are held hostage by any small group with guns and the training to use them.

An armed attack and kidnapping on a Nigerian oil facility owned by Exxon Mobil Corp. disrupted production Monday, providing the latest sign of how a fraying government amnesty deal with militants has posed fresh risks for energy companies operating in the oil-rich nation.

Gunmen in five skiffs with powerful motors attacked Exxon Mobil's Oso platform late Sunday, according to a security executive who works in the area and had seen an internal report on the incident. They boarded the platform and "conducted a room-to-room search. Crew and staff were beaten and robbed, the power supply was cut and communications were damaged," according to the security executive.

Eight Nigerian crew members were kidnapped from the platform, according to a senior industry executive familiar with the situation. It wasn't clear if there were other crew members who weren't kidnapped.

Exxon declined to say how the attack would affect output at one of Nigeria's biggest oil fields. It suspended Oso's production as a "precautionary measure," the company said in a statement. The field can produce the equivalent of 100,000 barrels of oil a day—as much as 5% of the country's daily output.

Thank you, dear reader, for that chance to vent.  It is time that I return to some pay work and I feel better able to give it my full attention.

I'm going to talk about the current Euro Crisis in another post, probably tomorrow.  The short version, however, is that the dollar is likely to gain in value in the short-term.  Some among the establishment of both political parties will suggest that this proves that our own current account deficiets or the growing debt do not matter.  Setting aside our sense of exceptionalism, however, I think it will find that it demonstrates just the opposite.

But let me find at least one uplifting something to leave you with.  As Mama said and continues to say, "This too shall pass."

Other news to start your week

Another recognition that we are at the end of "Cheap Oil"

The “post-peak” world clearly does not imply the End of the World: but it implies an extremely volatile one, whose dynamics will be difficult to predict. It is a world not of easy abundance, but of declining – and increasingly expensive – carbon-based resources. If we are to develop sufficient resilience to the various price shocks and converging crises of the “post-peak” world, we will need to recognize that they are symptomatic of an inevitable civilizational transition toward an emerging post-carbon age. There is no time for denial. Governments and communities need to start adapting now.

The State Department seems to be ignoring the plight of Iraq's Christians.

A full-scale genocide is under way in Iraq: a well-planned, well-financed, deliberate plot to cleanse the country of its Christian citizens. And thus far, neither the Iraqi government nor the United States is doing anything to stop it.

In an opinion piece Rabbi Shmuley Boteach suggests that the small government sought by the Tea Party is, or at least could be, conducive to the promotion of human dignity.

The very premise of dignity is something acquired through personal effort. Dignity is the human aura that comes through self-reliance. Its underlying premise is independence. A dependent life is a fundamentally undignified life. Self-respect is earned through the sweat of one's brow. An heir to a great fortune may travel the high seas in a hundred-foot yacht and soar through the air in a Gulfstream V. But he will remain fundamentally bereft of dignity so long as he is living on someone else's dime.

The effort to recapture the dignity that springs from self-reliance is what the tea party, at its core, should be all about.

Navigating an uncertain path

The idea of the gold standard seems to be gaining some traction.  Earlier in the week the President of the World Bank suggested a new basket of currencies, including gold, be used as a new "standard" by which individual currencies could be weighed.  He quickly clarified, however, that he did not intend to suggest a return to the classical gold standard but something quite different.

But Zoellick said that was not a call to return to the gold standard.
Speaking in Singapore Wednesday, Zoellick clarified that he was referring to the need for gold to play a role in a new international monetary system, which would need to balance the values of the the dollar, the euro, the yen, the pound and eventually the Chinese yuan.
"Gold is now being used, being viewed, as an alternative monetary asset. This is not the same as a gold standard," he said in prepared remarks.

But there are plenty of voices, increasingly less marginal, calling just for such a return, even in the pages of the New York Times. 

 Let the economists gasp: The classical gold standard, the one that was in place from 1880 to 1914, is what the world needs now. In its utility, economy and elegance, there has never been a monetary system like it. 

Of course the opinion is far from uniform.  There are still many voices rising against any return to gold but circumstances are forcing them to make explicit rather than just depending that the idea would be discarded out of hand.

The subsequent 40 years have seen wild swings in currency values, prolonged periods of high inflation and several acute financial crises. So you can readily see why some people support resurrecting gold's monetary role.
But there are four powerful arguments against. First, while the Gold Standard helped to sustain long-term price stability, it did not achieve anything like price stability in the short run. In 1822, the UK experienced deflation of 14pc. Yet by 1825 this had given way to inflation of 17pc.

Second, the idea that gold offers a guarantee of stable money values in the long run, and therefore supports confidence and long-term decision-making, is a delusion. In the past, countries were committed to the Gold Standard, which was widely expected to last forever. But we now know that gold can easily be replaced by a paper-based system. Once the genie is out of the bottle, it cannot be put back in. This means that there is no reassurance from relying on gold in the first place.

 My own view that we may very well, before it is all said and done, end up with a retreat into some form of gold or silver standard for our financial system.  The systemic problems are that bad.  The distance between here and there, however, could be a long walk and the terrain is unknown.

A return to a fixed standard could only be accomplished with a devaluation of the dollar either leading up to or at the moment of conversion.  If the danger of a fiat currency is in the direction of inflation, a standardized currency is always at risk of deflation.  If we entered it at the current cost of gold with our current level of household debt, the results would be disastrous.  If, however, through a period of high inflation or the setting of the worth of the dollar at 1/3, 1/4, 1/5 or much more of the current value our nation's and household debt would be reduced by roughly the same percentage.  The change would still be traumatic and would require a vast retooling of the economy.

Allowing the dollar to inflate before a return makes more sense the a sudden change anytime in the near future for numerous reasons.  First among them is the fear we have of change.  The gold standard was abandoned in stages.  It remained in some degree of distress from 1917 until it was finally completely abandoned in 1971, 54 years. 

Rather than a sudden change it seems more likely that we would return to a standardized currency in fits and starts, being dragged kicking and screaming all the way.  If that is the case we should expect to remain in a degree of economic uncertainty until the nation is frustrated enough to under go so great a change, and the disruption the change would cause will appear preferable to the status quo.  The market can stay irrational longer than anyone reading these words can stay solvent.  I think we will return to a gold standard.  I believe it will be in my lifetime.  I am not buying gold and only own what is on my left ring finger.

While it might be a good idea to invest in gold with your disposable income for the long run,  such a stategy is beset with risks.  For forty years it was illegal to own or sell gold bullion in the United States, are you willing to risk being locked in for that long?  The price of gold could very well go down before it goes up, if you are stuck with debt or a need to purchase goods prior to the new stability are you willing to be forced to buying low and selling lower, if not in absolute terms but in the value of the dollars you are able to retain.

In my view, a better investment would address a period of ongoing financial crisis prior to the ultimate re-organization.  Little or no debt and the ability to live cheaply are worth more than there equivalent in any precious metal.  As we roll through the uncertainty necessary to change a nation's habits away from the borrow and spend which has typified two generations, a strong community of support is more valuable to a family or individual than a roll of Krugerrands.  

Enjoying the Snow

Winter has arrived and we are all making our peace with the fact.