Olduvaiblog: Musings on the coming collapse

Home » 2013 » December » 03

Daily Archives: December 3, 2013

What Happens When The Oil Runs Out? | CollapseNet

What Happens When The Oil Runs Out? | CollapseNet.7-31-2013-king-hubbert

Summary of a lecture by Professor Chris Rhodes to the Conway Hall Ethical Society, Conway Hall, Red Lion Square, London. 11.00 am, Sunday July 28th, 2013.

The world supply of crude oil isn’t going to run out any time soon, and we will be producing oil for decades to come. However, what we won’t be doing is producing crude oil – petroleum – at the present rate of around 30 billion barrels per year. For a global civilization that is based almost entirely on a plentiful supply of cheap, crude oil, this is going to present some considerable challenges. If we look over a 40 year period, from 1965 to 2005, we see that by the end of it, humanity was using two and a half times as much oil, twice as much coal and three times as much natural gas, as at the start, and overall, around three times as much energy: this for a population that had “only” doubled. Hence our individual average carbon footprint had increased substantially – not, of course, that this increase in the use of energy, and all else, was by any means equally distributed across the globe.

 From the latest document that I can find – the B.P. Statistical Review – we see that the majority form of energy used by humans on earth is crude oil, accounting for 33% of our total, closely followed by coal at 30%: a figure that is rapidly catching up with oil, as coal is the principal and increasing source of energy in developing nations such as China and India. Natural gas follows in a close third place, at 24%; nuclear and hydroelectric power at 5-6% each; and the tiny fraction of our overall energy that comes from “renewables”, is just 1.6%. Thus, we are dependent on the fossil fuels for 87% of our energy. Now, such a comparison is almost misleading and naïve, because it tacitly presumes that if our oil supply becomes compromised, we can make a simple substitution for it using some other energy source.

However, this is not so readily done in practice, because oil is a particular and unique substance, having both a high energy content, and that it is readily refined into liquid fuels – effectively by distillation – to provide the petrol and diesel that runs practically all of the world’s transportation. Moreover, everything we depend upon – literally everything: food, materials, clothes, computers, mobile phones, pharmaceuticals etc. – for our daily existence is underpinned by a plentiful supply of cheap crude oil. So, the loss of this provision is going to have a profound, and shattering effect on human civilization.

In the “good old days”, e.g. the Humphrey Jones “Giant Gusher” drilled in Texas in 1922, it was necessary only to drill a hole in the ground to get oil. An oil well contains not only oil, but gas at high pressure, meaning that once the cap-rock that holds it all in place is broken, the oil is forced out in that familiar jet of black gold. The good old days indeed, because then it was necessary only to expend an amount of energy equal to that contained in one barrel of oil to recover a hundred barrels, which is like investing a pound and getting a return of a hundred pounds – a very good net profit. In 2013, the return is maybe twenty pounds or just three for extra-heavy oil, or for “oil” derived from tar sands, once it has been upgraded into liquid fuel.

Of greatest concern is how much oil is remaining. As noted, we currently use 30 billion barrels a year – 84 million barrels a day, or a thousand barrels every second. When it is trumpeted about some new and huge find of oil, e.g. the Tupi field off Brazil, thought to contain 8 billion barrels, in reality this is only enough to run the world for three months. Context should not be lost in these matters. The quality of the oil is also at issue. For example, much of the remaining oil is of the “heavy”, “sour” kind, meaning that it is not necessarily liquid at all, but bitumen, and contains relatively high levels of sulphur, necessitating complex and energy-intensive processing to get the sulphur out – which would otherwise be corrosive toward the steel used in the refinery – and to crack the heavier material into lighter fractions that can be used as fuel, or as feedstocks for industry.

So, it’s not just that we have got through much of our original bestowal of oil, but that what remains is of poorer quality – in other words, we have used-up most of the “good stuff”! Oil shale is not oil at all, but contains a material called “kerogen” which is a solid and needs to be heated to five hundred degrees Centigrade to break it down into a liquid form that in any way resembles what we normally think of as “oil”. So, when it is claimed that there are “three trillion barrels” of oil under America, really this is only to encourage voters and investors, because the actual Energy return on Energy Invested (EROEI) is so poor that there has been no serious commercial exploitation of oil shale to date, and probably there never will be.

Not only are we entirely dependent on crude oil for all our fuel and materials, but without cheap crude oil, and natural gas to make nitrogen fertilizers, we could grow no food. If we look at a field of soya beans being harvested in Brazil, we see a number of features. For one, those beans are not consumed at source, but are transported around Brazil and around the world. So, oil-derived fuels are necessary not only to run the tractors and combine harvesters, but the trucks, ships and planes to move the crop onto the world markets. In addition, we see the vast clouds of dust being thrown up behind the marching array of mighty machines – combine harvesters – which represents the loss of top-soil.

Even if we could solve all our energy problems, we are consuming the living and fragile portion of the earth’s surface that is our soil, and upon which we are utterly dependent to grow any food at all. We have “lost” around one third of our soil in the past half century – much of this through unsound and unsustainable agricultural practices – which does not bode well for the survival of a burgeoning human population. Another feature is that this land was once rain forest, which has been cleared to use the land for farming.

This is done either simply by setting fire to the forest, or by more exquisite means, such as taking a ship’s anchor chain, four hundred feet long – and if it is two inches in diameter, weighing five tonnes – then stringing it between two one hundred tonne tractors and simply driving over the terrain, so that the chain rips through everything that is there, tearing the trees out by their roots and destroying the structure of the soil in the process. The upshot is that the soil becomes unproductive within only a few years and so it is necessary to move on and do the same thing elsewhere.

In Britain we import about 40% of what we eat, and we use around 7 million tonnes of crude oil each year to fuel our food-chain. It can be said that we literally “eat oil”.

The concept of “Peak Oil” is due to Marion King Hubbert, a petroleum geologist working for the Shell Development Company in Texas, who predicted that oil production in America would peak in 1970. At that time, Texas was “awash” with oil – America being the world’s major oil-exporting nation then – and so no one took him seriously: but when in 1970, he was proved correct, Hubbert’s Peak entered the realm both of hard science and folklore. According to Hubbert, there is a 40 year lag between the year of peak discovery and that of peak production. If we apply this to the world situation, where global oil discovery peaked in 1965, we expect a global production in 2005. Indeed world production of oil has been on a flat line since 2005, and it is thought that we are at the production limit.

The price of oil has quadrupled in the past 10 years, reflecting the more strenuous efforts that are necessary to maintain production: deepwater drilling, fracking, tar sands, all of which have much lower energy returns than for conventional crude oil. Indeed, oil that is recovered from fracking costs about $105 a barrel to produce which until recently was more than it could be sold for. However, the price of oil is creeping up, and the industry is prepared to bear the loss for now, because it knows that the price of a barrel of oil will shortly rocket, and having cornered this “new” portion of the industry, will make big profits. Oil companies are not charities, after all. I emphasis the word “new” because fracking – properly called hydraulic fracturing – has been around since 1947: what is new is the combination of this technique with horizontal drilling, meaning that porous but impermeable rocks can be drilled-out laterally, then “fracked” to break them open thus releasing the oil or gas that they contain.

Fracking is a controversial matter, and there are grave concerns about groundwater contamination from the process. It is not only the fear that the chemicals that were originally present in the fracking fluid might migrate upward into the water table, but that other toxic materials, e.g. radon, that were confined safely within the natural prevailing geology, might be exhumed too. The Royal Society (U.K. equivalent of a national academy of sciences) has concluded that the procedure is safe, so long as it is strictly regulated, but how can this be guaranteed, when profits are the order of the day, and if the technology is to be employed across the world?

What too will become of the millions of gallons of contaminated water, injected under great pressure into the wells to fracture the rock, that remains? Will this be disposed of safely or simply left behind, potentially to leak into and contaminate the groundwater and the soil? This would be a tragic and cruel legacy for future generations.

Analyses made by both the International Energy Administration (IEA; effectively part of the U.S. Department of Energy) and its counterpart organisation, the Paris-based Energy Information Agency (EIA), concur that we will have lost around half our production of conventional crude oil by 2030. This is equivalent to four times the present output of Saudi Arabia, and it seems highly unlikely that this gap in supply can be filled from unconventional sources. Since we are entirely dependent on crude oil to fuel the world’s transportation, and looking at the amount of oil we are likely to be left with, we may conclude that it will be necessary to curb transportation by about 70% over the next 20 years.

This means the loss mainly of personalized transport and it is unfeasible that there will be 34 million electric cars in the U.K. (the current number of oil-fuelled cars) any time soon, and in reality, never. The only sensible means to move people around using electric power is by light rail and tramways, i.e. mass-transit systems.

If we can’t address the problem from the supply side we have to curb our demand. In the absence of cheap and widely accessible transport we will need to produce far more of our food and materials at the local level. Such a metamorphosis of human civilization from the global to the local, will be underpinned by building strong, resilient communities in which people share their skills and knowledge, to provide as much as possible at the local, grass-roots level. This is the underpinning philosophy of the growing network of Transition Towns. Frightening though all of this is, we may evolve into a happier and more fulfilling state of living than a perceived status quo, that in truth is all too rapidly running through our fingers.

By. Professor Chris Rhodes

 

Mass Die-Off of West Coast Sealife: Fukushima Radiation … Or Something Else? Washington’s Blog

Mass Die-Off of West Coast Sealife: Fukushima Radiation … Or Something Else? Washington’s Blog.

What’s Causing the Unprecedented Weirdness In West Coast Ocean Life?

NBC Nightly News reports that a mass die-off of starfish up and down the West Coast of North America is puzzling scientists:

Brian Williams, anchor: Environmental officials in California say there’s been another highly troubling report about what’s going on in the Pacific.  Something is killing the starfish and they don’t know why. They have been dying in record numbers on the West Coast. […]

Pete Raimondi, marine biologist: It’s happened so rapidly that some species are just missing. […]

Miguel Almaguer, reporter: An epidemic affecting waters from Alaska to Southern California causing millions of starfish to fall apart and melt away. […] Two species that used to thrive here have now vanished. […]

Raimondi: I’ve had probably 100 emails thus far saying, ‘Well, what about Fukushima, because of radiation?’ We haven’t ruled that out yet, but we’re clearly not ruling that in.

AlmaguerThe mysterious disease has now spread to at least 10 species of starfish and is threatening more every day.

King5 news in Seattle reports that scientists have tested for radiation, and found none:

Mon Dec 02 17:19:19 PST 2013

More sea star species dying off

A respected sea star expert released a report showing a deadly disorder has spread to more species. view full article

It’s not just sea stars.

There have been widespread reports of mysterious injury to Alaskan seals.

The Alaska Dispatch reports:

Scores of dead and sick ringed seals — some with open wounds, unusual hair loss and internal ulcers — … began washing up in summer 2011 in Western Alaska.

Even today, a few seals continue to trickle ashore, biologists said. But the cause of the illness remains a mystery, despite an international effort to identify it. Some people believe radiation from the Fukushima nuclear power plant disaster in Japan in March 2011 is a factor. That’s never been proven. It hasn’t been disqualified, either.

A lack of radiation sampling in remote regions after the explosion means no one knows how much airborne radiation fell into the Bering Sea ice, or whether seals were in the vicinity of any fallout, said Doug Dasher, a researcher with the University of Alaska Fairbanks.

If the seals did ingest radiation, much of it would have been excreted out of the body before the testing of the carcasses that occurred several months after the incident, he said. Such testing found radiation levels similar to those found in the mid 1990s.

St. Lawrence Island is “way too far north for the marine transport to occur right now,” Dasher said.

Still, for a community that harvests animals from the Bering Sea, its hard not to think about Fukushima, said Pungowiyi. He said he was getting ready to go seal hunting: Winds blowing in from the north have made for prime seal-hunting conditions.

“It’s always on the backs of our minds,” he said of the radiation.

More than a year ago, 15 out of 15 bluefin tuna tested in California waters were contaminated with radioactive cesium from Fukushima.

Bluefin tuna are a wide-ranging fish, which can swim back and forth between Japan and North America in a year:

news graphics 2005  607819a FDA Refuses to Test Fish for Radioactivity ... Government Pretends Radioactive Fish Is Safe

But what about other types of fish?

Sockeye salmon also have a range spanning all of the way from Japan to Alaska, Canada, Washington and Oregon:

Associated Press reports that both scientists and native elders in British Columbia say that sockeye numbers have plummeted:

Sockeye salmon returns plunge to historic lows.

***

Last month, [the Department of Fisheries and Oceans] noted returns for the Skeena River sockeye run were dire.

[Mel Kotyk, North Coast area director for the Department] said department scientists don’t know why the return numbers are so low…. “When they went out to sea they seemed to be very strong and healthy and in good numbers, so we think something happened in the ocean.”

***

“We’ve never seen anything like this in all these years I’ve done this. I’ve asked the elders and they have never seen anything like this at all.” [said Chief Wilf Adam]

Vancouver News 1130 notes that Alaskan and Russian salmon stocks have crashed as well:

“The sockeye runs way up north in the Skeena are low. The [fish] out of Bristol Bay, Alaska is down 30 to 35 per cent over last year. Russia has got a limited number of fish in the market. They are down about 40 per cent over all their salmon fisheries.”

(Russia’s East Coast sits on the Sea of Japan.  Indeed, Japan is closer to Russia than to Korea.)

Alaska’s Juneau Empire newspaper writes:

We are concerned this hazardous material is hitching a ride on marine life and making its way to Alaska.

Currents of the world’s oceans are complex. But, generally speaking, two surface currents — one from the south, called the Kuroshio, and one from the north, called the Oyashio — meet just off the coast of Japan at about 40 degrees north latitude. The currents merge to form the North Pacific current and surge eastward. Fukushima lies at 37 degrees north latitude. Thousands of miles later, the currents hit an upwelling just off the western coast of the United States and split. One, the Alaska current, turns north up the coast toward British Columbia and Southeast Alaska. The other, the California current, turns south and heads down the western seaboard of the U.S.

The migration patterns of Pacific salmon should also be taken into consideration. In a nutshell, our salmon ride the Alaska current and follow its curve past Sitka, Yakutat, Kodiak and the Aleutian Islands. Most often, it’s the chinook, coho and sockeye salmon migration patterns that range farthest. Chum and pink salmon seem to stay closer to home. Regardless of how far out each salmon species ventures into the Pacific, each fish hitches a ride back to its home rivers and spawning grounds on the North Pacific current, the same one pulling the nuclear waste eastward.

We all know too much exposure to nuclear waste can cause cancer. And many understand that certain chemicals, such as cesium-137 and strontium-9, contained in said waste products can accumulate in fish by being deposited in bones and muscle permanently.

We are concerned our Alaska salmon are being slowly tainted with nuclear waste. We are worried about the impact this waste could have on our resources, and especially the people who consume them.

***

We urge scientists in Alaska to be proactive about conducting research and monitoring our salmon species.

Similarly, the Canadian Broadcasting Corporation reports that salmon are migrating through the radioactive plume, but Canadian authorities aren’t testing the fish:

[Award-winning physician and preventative health expert Dr. Erica Frank, MD, MPH]: There are Pacific wild salmon that migrate through the radioactive plumes that have been coming off of Fukushima. Then those fish come back to our shores and we catch them.

CBC Reporter:  The Canada Food Inspection Agency says it now relies on Japan for test results concerning radiation.

(American authorities aren’t testing fish for radioactivity either.)

Another example – pacific herring – is even more dramatic.   Pacific herring is wide-ranging fish, spanning all the way from Japan to Southern California:

Every single pacific herring examined by a biologist in Canada was found to be hemorrhaging blood.  As ENENews reports:

[Photo credits Alexandra Morton and Vancouver 24 hrs.]

The Globe and Mail, Aug 13, 2013 (Emphasis Added): Independent fisheries scientistAlexandra Morton is raising concerns about a disease she says is spreading through Pacific herring causing fish to hemorrhage. […] “Two days ago I did a beach seine on Malcolm Island [near Port McNeill on northern Vancouver Island] and I got approximately 100 of these little herring and they were not only bleeding from their fins, but their bellies, their chins, their eyeballs.  […] “It was 100 per cent … I couldn’t find any that weren’t bleeding to some degree. And they wereschooling with young sockeye [salmon]

Sun News, Aug 12, 2013: [Morton] dragged up several hundred of the fish this past weekend and found the apparent infection had spread – instead of their usual silver colour the fish had eyes, tails, underbellies, gills and faces plastered with the sickly red colour. “I have never seen fish that looked this bad,” […] In June, the affected fish were only found in eastern Johnstone Strait, but have since spread to Alert Bay and Sointula, she said.

Canada.com, Aug 16, 2013: Morton […] pulled up a net of about 100 herring near Sointula and found they were all bleeding. “It was pretty shocking to see,” said Morton […] Herring school with small sockeye salmon and are also eaten by chinook and coho.

‘Response’ from Canadian Government

Vancouver 24 hrs, Aug 11, 2013: [Morton] says Fisheries and Oceans Canada [FOC] isignoring the problem. […] According to emails from FOC, the federal authority had asked the marine biologist to send in 20 to 30 herring in September 2011, saying that would be “more than sufficient for the lab to look for clinical signs of disease and provide sufficient diagnostics.” She did, and hasn’t heard back since. […] FOC officials did not respond to a request for comment by the 24 hours presstime.

Canada.com, Aug 16, 2013: Fisheries and Oceans Canada is trying to confirm reports from an independent biologist that herring around northern Vancouver Island have a disease that is causing bleeding from their gills, bellies and eyeballs. […] Arlene Tompkins of DFO’s [Department of Fisheries and Oceans’] salmon assessment section said staff in the Port Hardy area have not found bleeding herring. “We are trying to retrieve samples, but [Monday] we were not successful because of heavy fog,” she said. “We haven’t had any other reports of fish kills or die-offs [see salmon report below].” Tompkins has seen photographs provided by Morton […]

And see this report from CBS’ The Doctors:

There have been many other reports of mysterious sickness among West Coast North American sealife … such as dead and dying sea lions.  Sea lions’ main food is herring:

Sea lions will eat a lot of different prey items: octopus, squid, small sharks. But their bread and butter is herring ….

Given that pacific herring are suffering severe disease, it is worth asking whether the “unusual mortality event” among Southern California sea lions is connected.

CBC reports:

There’s something very odd happening in the ocean and in the waters around B.C. — sea creatures are behaving strangely. And species are turning up where they are rarely seen.

***

Extraordinary marine activity…. From California all the way to Alaska.

***

Others point to disasters like Japan’s tsunami that triggered a nuclear crisis, but no one knows for sure.

And the Newcastle Herald carried a report in October from a sailor saying that “the ocean is broken”:

The next leg of the long voyage was from Osaka to San Francisco and for most of that trip the desolation was tinged with nauseous horror and a degree of fear.

“After we left Japan, it felt as if the ocean itself was dead,” [Newcastle, Australia yachtsman Ivan] Macfadyen said.

“We hardly saw any living things. We saw one whale, sort of rolling helplessly on the surface with what looked like a big tumour on its head. It was pretty sickening.

“I’ve done a lot of miles on the ocean in my life and I’m used to seeing turtles, dolphins, sharks and big flurries of feeding birds. But this time, for 3000 nautical miles there was nothing alive to be seen.”

In place of the missing life was garbage in astounding volumes. [There is a huge quantity of debris from Japan heading across the ocean towards the West Coast. But it is unclear whether the sailor is referring to this or something else. After all, there is a lot of man-made garbage floating around the Pacific.]

***

And something else. The boat’s vivid yellow paint job, never faded by sun or sea in years gone past, reacted with something in the water off Japan, losing its sheen in a strange and unprecedented way.

Some – like EneNews – are convinced that the damage to sealife is due to Fukushima*. And – without doubt – the West Coast is being hit by radiation from Fukushima. And governments always cover up the extent of nuclear and other disasters for which they were partially responsible.

On the other hand, the New York Times report that it is an abundance of anchovies near shore which are attracting the whales … and the anchovies may simply be attracted by unusually nutrient-rich waters this year:

 

Others theorize that ocean acidification might be the culprit. It could instead be a pathogen, although it is unlikely it would effect so many species all at once over such a wide area.

EneNews rounds up stories on unusual sealife behavior:

Vancouver Sun, Nov. 27, 2013: Michael Harris, executive-director of the Pacific Whale Watch Association […] said he’s been working in Puget Sound and the Strait of Georgia for 30 years and has “never ever seen this kind of behaviour going on. They must sense this is a safe place to be.” […] Wild Whales Vancouver had up to 10 close encounters this season in the southern Strait of Georgia, mainly near Galiano Island […] The whales typically rolled on their backs and sides next to the boat and looked up at the passengers. One even placed its head on the boat while spyhopping, a behaviour in which the whale rises up vertically to look above the water […]

Global News, Nov. 27, 2013: Capt. Jim Maya […] who runs Maya’s Westside Whale Watch Charters, has been working on the waters of the Pacific since 1965 and says he has never seen anything like what they saw that day. […] Maya says he estimates the whale was about 35 to 40 feet long and was an immature female. She hung around the boat for about an hour […] Chad Nordstrom, a researcher with the Cetacean Research Lab at the Vancouver Aquarium, says they have been receiving more and more reports of humpback whale sightings along the B.C. coast, especially in the lower Strait of Georgia.

Vancouver Sun, Nov. 28, 2013: Andrea Hardaker, manager of Wild Whales Vancouver [said] “The passengers loved it. But they don’t know what to expect on the trip. Whatever they see they think is normal. For our guides and the captains, we know it isn’t normal.” […] [Hardaker] believes these are the first such reports in local waters.

See also: CBS News: 100s of whales in bay on California coast; It’s never been like this, we just can’t even believe it — Experts: We just aren’t sure what’s going on; “A once-in-a-lifetime chance… unheard of, it’s unbelievable, nobody’s seen this” (VIDEO)

And here:

Baldo Marinovic, research biologist at the University of California, Santa Cruz: “It’s a very strange year […] The $64,000 question is why this year? […] Now [the anchovies are] all kind of concentrating on the coast.”

Just a few weeks ago similar sightings were reported along Canada’s Pacific coast:

Vancouver Sun, Nov. 6, 2013: An extraordinary string of recent whale encounters around Vancouver Island is likely due to luck, not one factor, experts say. “This has not been a typical year,” said John Ford, head of the cetacean research program at Pacific Biological Station in Nanaimo. […] The “biggie” of the bunch is the endangered North Pacific right whale, spotted twice in B.C. waters for the first time in 60 years. […] There have been other remarkable whale encounters […]  passengers aboard the B.C. ferry between Galiano Island and Tsawwassen were treated to the sight of a superpod of about 1,000 Pacific white-sided dolphins […]

Nick Claxton, Indigenous academic adviser at the University of Victoria: Recent whale encounters could have a deeper meaning, according to an Indigenous worldview […] “We see them as our relatives, as ancestors. All of these occurrences remind us of our place here and our connection to the natural world. It’s for the better of all of us to listen.”

The bottom line is that more research is needed.   And nuclear experts said 4 days after the Japanese earthquake and that we all need to demand that fish be tested for radiation.

Note:  University of Washington Professor Trevor Branch has previously slammed our reporting on reduction in fish stocks:

I am surprised that an article composed of facts totally unrelated to Fukushima could make it past your editorial process, and the story has been widely derided by blogs and on twitter. Below is my response detailing the latest science, with the article attached in case you are unable to find it.

The scientists you quote repeated their own study on Pacific bluefin tuna in the US and Fukushima radiation testing in June 2013. Here are some highlights from their findings.

1. Radiation in bluefin from Fukushima is 1/1000 to 1/10000 of the radiation in natural seawater.

2. Radiation in bluefin from Fukushima is less than in food you eat every day that is uncontaminated (and much much less than x-rays, flying in a plane etc).

3. If 10,000,000 people each ate 124 kg per yr of bluefin tuna every year (which is a LOT), 2 might die from radiation.

4. However, global catch of Pacific bluefin is 20,000 t a year, allowing only 161,000 people to eat that much, resulting in only 0.03 extra deaths per year.

5. If they ate less, the risk would be much less.

6. Since a single Pacific bluefin tuna sold this year for $1.8 million, they would also be left in poverty. (Not all sell for that
much, I know.)

Now the salmon and herring in U.S. waters do not travel anywhere near Fukushima, and would have a radiation load thousands to millions of times lower. These fish have local populations and are quite distinct from those populations near Fukushima. Radiation from Fukushima is diluted very rapidly within a few km of the leaks (the volume of the ocean is vast), and further than that the radiation is less than the radiation from naturally occurring polonium in the ocean.

All of the scary stories compiled in the article are just that, scary stories completely unrelated to Fukushima. For example the quotes from Morton are specifically about disease in fish that has nothing to do with radiation.

To preserve the integrity of your news blog, I would suggest retracting the article.

We responded at the time:

While we respect Professor Branch’s expertise in fisheries science – his knowledge of fisheries is significantly greater than ours, and he has proven that he is an honestacademic by disclosing his funding sources to us upon request – we believe that he has made several erroneous assumptions.  Specifically:

1. There won’t be nearly as much dilution as assumed.

2.  Low-level radiation is not harmless, there was no background cesium radiation until recently, and our bodies have adapted to excrete radiation from sources such as bananas … but not cesium from fish.

In any event, this post does not argue that the injury to sealife is due to Fukushima … we honestly don’t know the cause or causes of the unusual behavior in ocean life, and are only certain of one thing:  the U.S. and Canadian governments should fund extensive testing to figure out what’s really going on, and then publicly release the results.

* EneNews was the main source of information for this essay. For example, here’s a one-sentence round-up of ocean weirdness from EneNews:

There have been several similar reports about wildlife around the Pacific, includingsardinessealssea lionspolar bearssea starsturtlessalmonherringcoral and more.

Canadian police arrest Toronto man suspected of spying for China | Canada | Reuters

Canadian police arrest Toronto man suspected of spying for China | Canada | Reuters.

TORONTO (Reuters) – Canadian police have arrested a Toronto man suspected of seeking to give China classified information about Canadian shipbuilding procurement policies, security officials said on Sunday.

Jennifer Strachan, a chief superintendent with the Royal Canadian Mounted Police, told a news conference that Canadian citizen Qing Quentin Huang, 53, faced two charges of attempting to communicate with a foreign entity.

“On Thursday the RCMP was informed that the accused was taking steps to pass on information of a classified nature to China,” she told a rare weekend news conference.

“In these types of cases, sharing of information may give a foreign entity a tactical, military or competitive advantage by knowing the specifications of vessels responsible for defending Canadian waters and Canadian sovereignty.”

Strachan said Huang, who was arrested on Saturday, had worked for a subcontractor involved in ship design. She declined to say what information Huang had tried to provide to China, but said there was no threat to public safety.

Chinese Foreign Ministry spokesman Hong Lei rejected the allegations.

“The relevant reports about a Canadian man suspected of providing information to the Chinese government are completely baseless,” Hong told a daily news briefing in Beijing on Monday.

Canada has had a complicated relationship with China, with official efforts to boost trade and improve business ties at times conflicting with deep concern about the role that Chinese state-owned entities should be allowed to have in Canada.

Canada last year allowed state-owned energy company CNOOC Ltd to buy up domestic energy producer Nexen Inc, but made clear that it would not allow further purchases of domestic oil sands companies by state-owned enterprises.

Huang was arrested just days after Canada’s official spending watchdog said the government has underestimated the costs of a multibillion-dollar naval shipbuilding plan and will either have to build fewer ships or settle for vessels with fewer capabilities than it initially planned.

The new ships will play an important role as Canada asserts sovereignty claims in the Arctic, a disputed region that is rich in energy and mineral resources.

The news conference announcing Huang’s arrest involved officials from many Canadian security agencies, including several police forces, border services and the secretive spy agency, the Canadian Security Intelligence Service.

The Toronto resident, who police said appeared to have been acting alone, will appear in court for a bail hearing on Wednesday. The charges carry a maximum sentence of life in prison.

(Additional reporting by Megha Rajagopalan in BEIJING; Editing by

 

An open letter from Carl Bernstein to Guardian editor Alan Rusbridger | Media | theguardian.com

An open letter from Carl Bernstein to Guardian editor Alan Rusbridger | Media | theguardian.com.

Carl Bernstein

Carl Bernstein, Watergate journalist and author, who has written a letter to the Guardian editor, Alan Rusbridger, who is to be questioned by MPs over the NSA revelations. Photograph: Teri Pengilley

Dear Alan,

 

There is plenty of time – and there are abundant venues – to debate relevant questions about Mr Snowden’s historical role, his legal fate, the morality of his actions, and the meaning of the information he has chosen to disclose.

 

But your appearance before the Commons today strikes me as something quite different in purpose and dangerously pernicious: an attempt by the highest UK authorities to shift the issue from government policies and excessive government secrecy in the United States and Great Britain to the conduct of the press – which has been quite admirable and responsible in the case of the Guardian, particularly, and the way it has handled information initially provided by Mr Snowden.

 

Indeed, generally speaking, the record of journalists, in Britain and the United States in handling genuine national security information since World War II, without causing harm to our democracies or giving up genuine secrets to real enemies, is far more responsible than the over-classification, disingenuousness, and (sometimes) outright lying by a series of governments, prime ministers and presidents when it comes to information that rightly ought to be known and debated in a free society. Especially in recent years.

 

You are being called to testify at a moment when governments in Washington and London seem intent on erecting the most serious (and self-serving) barriers against legitimate news reporting – especially of excessive government secrecy – we have seen in decades.

 

The stories published by The Guardian, the Washington Post and the New York Times based on Mr Snowden’s information to date hardly seem to represent reckless disclosure of specific national security secrets of value to terrorists or enemy governments or in such a manner as to make possible the identification of undercover agents or operatives whose lives or livelihoods would be endangered by such disclosure. Such information has been carefully redacted by the Guardian and other publications and withheld from stories based on information from Mr Snowden. Certainly terrorists are already aware that they are under extensive surveillance, and did not need Mr Snowden or the Guardian to tell them that.

 

Rather, the stories published by the Guardian – like those in the Washington Post and the New York Times – describe the scale and scope of electronic information-gathering our governments have been engaged in – most of it hardly surprising in the aggregate, given the state of today’s technology, and a good deal of it previously known and reported and indeed often discussed “on background” with reporters by high government officials from the White House to Downing Street confident that their identities will not be disclosed.

 

Moreover, the Guardian—like the Times and the Post in the US – has gone to great lengths to consult with Downing Street, the White House and intelligence agencies before publishing certain information, giving time for concerns to be raised, discussed sensibly, and considered.

 

What is new and most significant about the information originating with Mr Snowden and some of its specificity is how government surveillance has been conducted by intelligence agencies without the proper oversight – especially in the United States – by the legislative and judicial branches of government charged with such oversight, especially as the capabilities of information-gathering have become so pervasive and enveloping and with the potential to undermine the rights of all citizens if not carefully supervised. The “co-operation” of internet and telecommunications companies in some of these activities ought to be of particular concern to legislative bodies like the Commons and the US Congress.

 

As we have learned following the recent disclosures initiated by Mr Snowden, intelligence agencies – especially the NSA in the United States – have assiduously tried to avoid and get around such oversight, been deliberately unforthcoming and oftentimes disingenuous with even the highest government authorities that are supposed to supervise their activities and prevent abuse.

 

That is the subject of the rightful and necessary public debate that is now taking place in the US, the UK and elsewhere.

 

Rather than hauling in journalists for questioning and trying to intimidate them, the Commons would do well to encourage and join that debate over how the vast electronic intelligence-gathering capabilities of the modern security-state can be employed in a manner that gives up little or nothing to real terrorists and real enemies and skilfully uses all our technological capabilities to protect us, while at the same time taking every possible measure to insure that these capabilities are not abused in a way that would abrogate the rights and privacy of law-abiding citizens.

 

There have always been tensions between such objectives in our democracies, especially in regard to the role of the press. But as we learned in the United States during our experience with the Pentagon Papers and Watergate, it is essential that no prior governmental restraints or intimidation be imposed on a truly free press; otherwise, in such darkness, we encourage the risk of our democracies falling prey to despotism and demagoguery and even criminality by our elected leaders and government officials.

 

With warmest regards and admiration,

 

Carl Bernstein

 

Hezbollah blames Saudi for embassy attack – Middle East – Al Jazeera English

Hezbollah blames Saudi for embassy attack – Middle East – Al Jazeera English.

An al-Qaeda linked group claimed responsibility for the November 19 attack [EPA]
The leader of Lebanon’s Hezbollah has accused Saudi Arabia of being behind last month’s two suicide bombings that targeted the Iranian Embassy in Beirut.

Sheikh Hassan Nasrallah’s comments on Tuesday mark the first time Hezbollah has openly accused the kingdom, and marks a sharp escalation in the Shia Muslim group’s rhetoric.

An al-Qaeda linked group has claimed responsibility for the November 19 attack that killed 23 people, saying it was in response to Hezbollah and Iran’s involvement in Syria.

Nasrallah said the claim was credible but accused Saudi intelligence of providing backing and support.

He also said Saudi intelligence was behind daily attacks in Iraq.

Nasrallah spoke in an interview Tuesday with Lebanon’s private OTV network.

Elsewhere in Lebanon, clashes resumed on Tuesday between Lebanese armed groups who back opposing sides of Syria’s war and 21 fighters were arrested by the army as it pursued a six-month-long mandate to end bloodshed battering the city of Tripoli.

The conflict between the majority Sunni Muslim Bab al-Tabbaneh district and the adjacent Alawite neighbourhood of Jebel Mohsen in Tripoli has killed more than 100 people this year.

Repeated attacks

But residents, fighters and a local politician told Reuters on Tuesday it was unlikely to end soon despite army efforts.

Over the weekend, the relatives of the car bomb victims protested in a Tripoli square, demanding that leading Alawite political leaders be arrested and calling for Jebel Mohsen’s electricity and water supplies to be cut off.

The latest clashes started after repeated attacks on Alawite targets over the past week in which several people were wounded.

Ten people were killed over the weekend.

The army provided no details on the 21 men seized by soldiers.

 

Greenhouse gas reduction called threat to oil industry – Politics – CBC News

Greenhouse gas reduction called threat to oil industry – Politics – CBC News.

Greenhouse gas reduction called threat

Greenhouse gas reduction called threat 2:09

Alberta’s proposed oil and gas regulations are too ambitious and will hobble the Canadian industry’s ability to compete, says the industry association in Alberta government documents obtained through provincial freedom of information laws.

The industry group says the proposed regulations won’t buy any goodwill and the government should delay their introduction.

The 200-page trove of memos, correspondence and reports offers a rare glimpse behind boardroom doors at the negotiations between industry and government to craft rules to reduce greenhouse gas emissions.

The Canadian Association of Petroleum Producers offers blunt assessments of Alberta’s plan to introduce rules that would demand industry reduce greenhouse gases by 40 per cent per barrel and charge $40 per tonne of CO2 above that level.

David DalyDavid Daly, the Canadian Association of Petroleum Producers’ manager of fiscal policy, penned the file titled CAPP Concerns and Questions for Alberta and Consultants. It was made public under Alberta’s freedom of information legislation. (LinkedIn Photo)

Alberta already has a carbon pricing scheme that costs CAPP members about 10 cents per barrel of oil. The new plan could cost industry up to 94 cents per barrel.

“Proposed 40/40 is 9 fold increase over current. Why such a dramatic step?” writes David Daly, CAPP’s manager of fiscal policy. The average price that a barrel of western Canadian bitumen fetched in 2013 was about $75, so the carbon-pricing increase would represent about a one per cent increase in the cost of a barrel oil.

That is just one quote from a file titled, CAPP Concerns and Questions for Alberta and Consultants. It tells the tale of an industry afraid that strong oil and gas regulations will rob it of what little competitive edge it has.

Strikingly candid comments

The candour is striking:

  • “Will higher stringency requirements impact production and revenue? Very likely.”
  • “GHG policies should be done in concert with other jurisdictions. US has no carbon tax. Why be so far out in front of them? What is that based on?”
  • “Will higher stringency requirements [oil and gas regulations] deliver greater GHG reductions? Unlikely. The challenge with the oil sands is that current technology is not yet available for deployment.”

In the end, the industry’s prescription is to delay putting the regulations into effect.

“Major policies like this one should not be fast-tracked. Adequate time is required for study analysis and consultation,” writes Daly.

That suggestion irks environmentalists, who point out that negotiations over oil and gas regulations between industry and the federal and provincial governments have been going on for over two years.

“This is not a case where we need more research. We need more action and that’s what hasn’t been happening,” argued Clare Demerse of the Pembina Institute, an environmental think-tank.

The industry defends itself by pointing out that the documents provide just a snapshot in the middle of negotiations and that nothing is final yet.

“What we want to ensure is that we’ve got a competitive industry in Canada that can continue to grow, but also, very importantly, can continue to invest in the technologies that are going to be extremely important in driving down greenhouse gas emissions,” said David Collyer, CAPP’s president, in an interview with CBC News.

In the documents, the CAPP plan calls for a 20 per cent intensity reduction and $20 per tonne of CO2.

That is half of what the Alberta government’s plan is and only marginally stronger than the regulations now — 12 per cent and $15, said Demerse.

But the CAPP document explains the association’s approach.

“Will higher stringency requirements ‘secure’ social license [public support] and forestall negative policy action elsewhere? Unlikely,” writes Daly.

Demerse, on the other hand, believes that weak regulations are just going to make doing business harder for the oil and gas industry.

“The customers of the oilsands are asking very tough questions. Right now, the sector does not have good answers to give. When they continue to ask for what is essentially the weakest possible regulation, I don’t think that is working for their real best interest.”

 

“NSA’s Mission Is Of Great Value To The Nation” – The Complete “Authorized” NSA Thanksgiving Dinner Talking Points | Zero Hedge

“NSA’s Mission Is Of Great Value To The Nation” – The Complete “Authorized” NSA Thanksgiving Dinner Talking Points | Zero Hedge.

It seems getting an 8 pm “escape” from friends and family this Thanksgiving to rush into the nearby World Wrestling Federation Walmart may have been a welcome reprieve for some. Those some in question being NSA agents, and just in case their friends and family got a little too pesky, boisterous or simply inquisitive, all the employees of the National Security Agency and the Central Security Services received a prepared memo with preauthorized talking points designed to “guide” conversations over the Thanksgiving dinner table. Plastered at the head of the 2-page propaganda is a Douglas Adams-like (or was that Isaac Asimov) in its simplicity bullet point: “(1) NSA’s mission is of great value to the Nation.” How was it that “defenders” of the fatherland during the Third Reich were being brainwashed again? But we digress.

Some of the other brainwashing encouraged talking points: “(2) NSA performs its mission the right way—lawful, compliant and in a way that protects civil liberties and privacy; (3) NSA performs its mission exceptionally well. We strive to be the best that we can be, because that’s what America requires as part of its defense in a dangerous world; (4) The people who work for NSA are loyal Americans with expert skills who make sacrifices to help protect the freedoms we all cherish; (5) NSA is committed to increased transparency, public dialog and faithful implementation of any changes required by our overseers.”

There are numerous sub-bullet point to each of these humorous propaganda headers, however the gist is clear. Firedoglake has done some further analysis even if the commentary is largely trivial:

A Misleading Statistic on Disrupting Terrorism the NSA Won’t Stop Promoting

 

“NSA programs protect Americans and our Allies,” the document reads. “As an example, they have helped to understand and disrupt 54 terrorist events since 9/11: 25 in Europe, 11 in Asia and 5 in Africa. Thirteen of those had a homeland nexus.”

 

Deputy Director John Inglis admitted in August during a Senate hearing, when pressed by Sen. Patrick Leahy, that US bulk records phone spying had been “critical” in stopping just one terrorist plot. He clarified that the spying on phone records had only “made a contribution” to discovering the 13 plots.

 

Sens. Ron Wyden, Mark Udall & Martin Heinrich, who filed a brief in support of an American Civil Liberties Union (ACLU) lawsuit challenging the collection of phone records of all Americans, explained the Executive Branch has defended the program by conflating it with “other foreign intelligence authorities.” The senators highlighted the fact that the collection under Section 215 of the PATRIOT Act had played “little or no role in most of these disruptions.”

 

“Indeed of the original fifty-four that the government pointed to, officials have only been able to describe two that involved materially useful information obtained through the bulk call-records program,” the senators added. “Even the two supposed success stories involved information that [the senators] believe—after repeated requests to the government for evidence to the contrary—could readily have been obtained without a database of all Americans’ call records.”

 

At this point, any intelligence agency leader, member of Congress or government official who highlights 54 “thwarted” plots is advancing propaganda to save the NSA from being forced into giving up this power to collect the phone records of all Americans.

 

FISA Court Opinions Show the NSA Has Not Performed Its Mission in Lawful and Compliant Manner

 

The claim that NSA “performs its mission” in a manner that is “lawful, compliant, and in a way that protects civil liberties and privacy” is demonstrably false.

 

A Foreign Intelligence Surveillance Court (FISC) judge ruled, when reviewing a program that was collecting records of Internet communications” that the agency had committed “longstanding and pervasive violations” of prior orders by the court. It found that government officials knew or had reason to know that “portions” of collection constituted “unauthorized electronic surveillance.” This unauthorized and illegal surveillance “included information concerning the identity of the parties and the existence of communications to or from persons in the United States.”

 

FISC Judge John Bates stated that the government had a “history of material misstatements”—otherwise known by Director for National Intelligence James Clapper as “least untruthful” answers and known among non-members of the national security state as lies. The government had a “poor track record” of exceeding the implementation constraints or going beyond purported privacy safeguards represented to the court.

 

Another ruling by the FISA Court in 2009 found, the NSA “frequently and systematically violated” the agency’s “minimization procedures,” intended to protect Americans’ privacy, “that it can fairly be said that this critical element of the overall [business records] regime has never functioned effectively.”

 

As Julian Sanchez of the CATO Institute recently recounted, “For the first three years of the call records program’s current incarnation, the FISC was misinformed about how it really worked. As a result, software tools routinely accessed the data without the required approvals: Of the 17,835 phone numbers searched by one automated alert list from 2006 to 2009, only 1,935 had been vetted for “reasonable suspicion.” Query results were also improperly shared with the CIA and FBI.”

 

In fact, journalist Marcy Wheeler, who has written in extensive detail on all the released NSA documents so far, has demonstrated through multiple posts that the NSA has continued an illegal wiretapping program that has grown in size since it was first exposed under President George W. Bush.

 

Targeting a US Person’s Porn Viewing Without Probable Cause

 

The agency claims the “NSA does not target US citizens or permanent resident aliens unless that targeting is premised on a finding of probable cause to believe that the person is a foreign power or the agent of a foreign power.” But journalists Glenn Greenwald, Ryan Gallagher and Ryan Grim recently published parts of a document for a story at Huffington Post that showed NSA director Gen. Keith Alexander had sought to discredit radical Muslims by spying on their porn-viewing habits. One of the six targets discussed in the document was a US person.

 

None of these people targeted were believed by the NSA to be involved in any terrorist plots. The NSA wanted to embarrass them because they had a history of espousing views that the agency considered dangerous to the United States. There was no “probable cause” to suggest the persons targeted with this COINTELPRO-style spying tactic had committed any criminal acts of violence.

And so on. Full propaganda below:

 See here.

 

Avoiding the Bubble in Stocks & Bonds: The Wisdom of Looking Like an Idiot Today | Peak Prosperity

Avoiding the Bubble in Stocks & Bonds: The Wisdom of Looking Like an Idiot Today | Peak Prosperity.

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;

~ Opening stanza to Rudyard Kipling’s “If”

So, let’s say you’re a prudent person who has concerns that our economy isn’t ‘recovering’ as robustly as you’d like.

Perhaps you still remember the speed and depth of the 2008 credit crisis’ arrival, and its toxic impact on asset prices, jobs, and overall trust in the financial system. Maybe you took notes during the preceding tech and housing bubbles and their aftermath. If so, you likely swore that “Never again!” would you put your wealth at risk during such obvious times of public mania.

Chances are, you’ve probably logged a lot of online hours over the past several years trying to read the economic tea leaves more closely. Are things becoming more stable, or less? What are “safer” measures for protecting and building wealth than simply putting all your chips into the paper markets (stocks & bonds) and real estate?

As a result, you’ve probably had a smaller percentage of your wealth in the stock/bond markets over the past few years than your peers. You probably also own some gold and silver, likely having bought much of it between 2009-2011 with the stock market collapse still fresh in your memory. Chances are also good that you’ve made a series of “preparedness” investments (stored food, etc.) as an insurance policy in case really tough times were to break out. Most of your family and friends didn’t take these steps, nor are they particularly interested in talking about your reasons for taking them.

So, if this sounds at all like you, five years after the 2008 crisis, how is the “prudent” strategy looking today?

Looking Like an Idiot

As one who took similar steps, I’ll confirm that it looks pretty lousy to the casual observer.

Stocks & Bonds

There has been an absolute party in the stock market over the past two years. The S&P is up nearly 40% (!) since early 2012 and has almost tripled since its 2009 lows. It’s been nearly impossible not to make money in the stock market recently (unless you’ve owned mining shares).

Bonds have remained at historically elevated prices. And although 2013 has seen prices come off slightly from their highs, prices are still substantially above pre-crisis levels.

The pumped-up performance of paper assets here is, of course, due to the staggering amounts of new money that the Fed has been creating since 2008. Starting with a balance sheet of $880 billion pre-crisis, the Fed has since expanded it by an additional $3 trillion, in less than 5 years. And it’s continuing to expand to the tune of $85 billion (some calculate $100 billion) per month.

Most of that money sits in excess reserves enriching the banks at zero risk, at high hidden cost to the public (a rant for another day). But enough of it is sloshing over into the markets where it does exactly what excess liquidity always does: rise all boats.

So, if you decided to stay out of the markets, you’ve watched the party boat pass you by. They say don’t fight the Fed, and so far, the Fed is indeed winning. In reality, it will likely prove to be the Charlie Sheen version of “winning”, but to the casual observer whose 401k is up 20% this year, the Fed definitely appears to be playing the better hand.

Real Estate

How soon we forget. Home prices have resumed climbing at historically aberrant rates. Case-Shiller just reported that year-over-year, its national home price index grew by 11.2%.

A number of markets have re-entered bubble territory. San Francisco, where prices are now higher than at their 2007 peak, saw a 26% year-over-year increase in average prices. Las Vegas, the poster child for housing price excesses six years ago, saw a 29% average price increase from 2012 to 2013.

The tell-tale sign of an overheated housing market – house flipping – is back.

If you’ve been holding off on purchasing real estate (as I have) – expecting that a stumble back into recession, or higher interest rates, could bring prices down to saner baselines – again, you’re watching prices get away from you.

Precious Metals

Ugh. There’s no denying that it has been a very rough two years for gold and silver holders. As I’m writing this, gold and silver are dropping to near 4-year lows.

For those burned by the last crisis who purchased precious metals near their zenith in 2011, hoping to protect the purchasing power of their capital, the nauseating declines since early 2012 (especially in silver) have done anything but.

Those who bought PMs pre-2008 enjoyed a long stretch of validation while prices appreciated year after year. With a material percentage of that appreciation now gone, and month after month of relentless losses punctuated by vicious price smashes, it’s harder to feel as smart as it once was.

But it’s maddening. With the $3 trillion in new currency recently created by the Federal Reserve, shouldn’t precious metals be appreciating? Wildly? Isn’t that their central promise: to hold value as the purchasing power of paper money inflates away? But instead, they’re decreasing in dollar price, even as the money supply continues to expand. How is that possible?

And Bitcoin! From almost out of nowhere, a new alternative currency skyrockets from nearly valueless to (briefly?) match the price of gold. It’s like adding insult to injury for the 99.9% of precious metals holders who don’t also hold Bitcoin. How can the world suddenly wake up to the advantages offered by non-fiat currency, and yet still treat the granddaddy of sound money like kryptonite?

Sentiment

In 2009 and 2010, those of us who had warned our friends of the lurking risks in our economic and financial system suddenly looked like geniuses, instead of the kooks that folks had dismissed us as. Now, we’re back to being kooks.

A chart Chris has been sharing recently with our enrolled members shows that at no time in the past 30 years has sentiment been this bullish, not even during the Internet stock mania of the late 1990s:

Faith in the current system is as high as it has ever been, and folks don’t want to hear otherwise.

This extreme optimism extends beyond the Economy. In the Energy sphere, in news headlines discussion of the “shale miracle” is still omnipresent – without, of course, any mention of net energy, extraction costs, or depletion rates. In the Environment, coverage of the real-time collapse of key fisheries or water shortages likely to impact food production rarely gets any mainstream notice.

In short: If you’re one of those people who thinks it prudent to have intelligent discussion on some of these risks– that maybe the future will turn out to be less than 100% awesome in every dimension – you’re probably finding yourself standing alone at cocktail parties these days.

The Madness of Crowds

Charles MacKay’s excellent classic reference book, Extraordinary Popular Delusions and the Madness of Crowds, explains the nefarious nature of public manias: They strive to suck in as many participants as possible before collapsing.

We are seeing classic signs of the abandonment of concern by the public in favor of not missing out on ‘easy gains’. In addition to the examples mentioned above, signals that the fear trade has given way to the greed trade are abundant these days:

  • Stock chasing – Here’s a quote the WSJ recorded from an actual retail investor buying shares on the first day of the recent twitter IPO:  I messed up not buying any Facebook so I want to get some Twitter. I’m just buying because everyone’s talking about Twitter. Not because of its product (which she admitted she didn’t use). Or its business model (which has never been profitable and unclear whether it ever will be). The purchase decision was based purely on hype.
  • Priority abandonment – At Peak Prosperity, we speak with professional financial advisers frequently. The advisers we know best focus on risk mitigation and remain skeptical of the sustainability of the prolonged market rally. Many of their accounts signed on after 2008, clearly declaring that they prioritized protection of their capital over everything else. Yet a growing number of these investors are watching the continued rise in financial asset prices and are now pushing for more aggressive management. They’re abandoning the prudence that was so important to them just a few years ago.
  • Bear capitulation – The path to a bull market peak is littered with the carcasses of bearish analysts that dared to challenge its rise. As the % bearish Investors Intelligence chart above shows, there are few bears left to be found anymore. Just last week saw a major defection from the bear camp, with the perennially critical Hugh Hendry throwing in the towel, exclaiming:

I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out.

I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.
I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell’.
  • Warning sign dismissal – It’s not as if there aren’t clear alarm bells being sounded by the very experts the public looks to for such warnings. It’s just that these warnings are being ignored by the market. No one wants the party to end:

“All markets are bubbly”

~ Bill Gross, November 29, 2013

“In many countries the stock price levels are high, and in many real estate markets prices have risen sharply…that could end badly. I find the boom in the U.S. stock market most concerning,”

~ Robert Shiller, December 1, 2013

“Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in [at least 17 global] housing markets”

“What we are witnessing in many countries looks like a slow-motion replay of the last housing-market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be.”

~ Nouriel Roubini, November 29, 2013

When this latest global asset bubble bursts as Roubini reminds us, by definition, it must; the public will cry,“Why didn’t anyone warn us?” The media will reflexively utter, “Nobody saw this coming,” But the truth is, there is evidence galore for those who choose to look for it.

The Wisdom of Looking Like an Idiot Today

The other key characteristic about popular manias/bubbles is that they collapse suddenly. Much more swiftly than they took to build.

The resultant carnage catches the masses like deer in headlights. The Kubler-Ross stages of grief begin quickly, and since Denial is Stage 1, most folks delay taking action out of disbelief. Soon the Bargaining stage is reached, and they continue to delay reaction as prices continue falling  praying for the chance to get out if a reversal would just happen. It’s not until Acceptance that most will take action, selling after the down draft has largely run its course.

Here are some useful stats to keep in mind that show how sudden and savage the 2008 market collapse was:

  • Week of Oct 6, 2008 – The Dow Jones drops 18%; its worst week ever in terms of both absolute and percentage loss.
  • March 6, 2009 – The nadir for the stock market. By this date, 5 months after the crisis began, the Dow was down 54% since October

The takeaway here is that the wealth destruction caught most investors flat-footed. Most were unprepared both psychologically as well as with their portfolio positioning – to react.

Many investors thought themselves savvy and nimble enough to avoid the losses they ultimately suffered, telling themselves an ill-fated narrative similar to what Charles Prince told his shareholders:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

~ Chuck Prince, Citigroup CEO, Jul 9 2007

Most readers remember how Citigroup’s price dropped from over $500/share, when Prince made this comment, to $10/share in March 2009. Prince was booted from his CEO role in late 2007 due to emerging losses resulting from the bank’s MBS and CDO positions, investment classes which proved to be at the heart of the 2008 crisis.

So, a smart question to ask at this time is: Is the moment in time we’re in today closer to January 2006, when there were several years left of exuberance to ride? Or is it more like September 2008, poised at the precipice?

A smarter answer is: There’s no way to know with acceptable certainty.

Like grains of sand piling up or snowflakes falling on a cornice, we can assess the growing level of risk, but we can’t identify the grain of sand or snowflake that will cause the eventual cascade. We can’t predict the collapse timing with confidence. We can – and will – continue to make our best-educated estimates, but the exact timing is unknowable.

So, given that fact, as John Hussman so pithily captures, bubble markets force us to make a choice:

The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak.

And so your choice is upon you. Look at the evidence around you  a movie nearly identical to one you saw in 2000 and again in 2008 – and either decide to party with the herd while the music plays (look smart today), or park yourself in safety now (look smart tomorrow).

Since the timing of the next correction is unknowable, the prudent choice is obvious. But it’s not easy, for all of the reasons mentioned at the start of this article.

A helpful question to ask yourself is: If I could talk to my 2009 self, what would s/he advise me to do?

For most of us, our past self, recently reminded of the anguish of wealth destruction, would say, “Run to safety!” at the first whiff of anything bubblicious. Research has shown that when the chips are down, the benefits of loss aversion are always preferred to the joys of gain.

Don’t put yourself in a position to relearn that lesson so soon after the last bubble. Exercise the wisdom to look like an idiot today.

The Need for Discipline is Greater Than Ever

Okay, so what should today’s “idiot” focus on doing?

  • Build cash – It’s not sexy. And it’s not fun to see the dollar price of nearly every asset known to man escalate while you hold cash. But bubbles are designed to take as much as possible from as many people as possible. During the popping of a bubble, the real wealth (underlying assets like companies, land, minerals, etc.) doesn’t vaporize like the high prices do. Those assets are simply transferred at a lower (more attractive) price to those people who still have money. Be one of those people.
  • Hold on to your precious metals – I know. It’s painful right now. For most PM owners, just hold onto what you have right now. Those with stronger stomachs should be dollar-cost averaging. Remember, the fundamentals for owning gold and silver have not changed AT ALL over the past few years. Stay largely with physical bullion. Don’t speculate with the mining stocks at this time unless you’re a risk junkie (or masochist?) and then only with money you can afford to lose.
  • Scout out locally-based hard-asset investments for the future – Once this bubble pops, higher interest rates and lower prices will result. Look around your local area for assets (businesses, housing, farmland, livestock, etc.) that you would consider holding at least a percentage ownership in. Calculate what price would make you an interested investor. While that price may be years away, when the impact of a market correction hits, you’ll be poised to move ahead of the other savvy investors to secure the opportunities you want (and play a role in stabilizing the community in which you live).
  • Design your trading plan for a market downdraft – What steps will you/your financial adviser take if the market starts cratering? If you don’t currently have a plan in place, now is the time to design it. Will you employ stops? What “safe assets” will you move to? (Treasurys, cash, other currencies?) Will you strictly be a sidelines observer, or will you take any active short positions on the downside? Will there be opportunity to generate income using vehicles like covered calls? Whatever makes sense for you, devise your strategy in the calmness of today vs. on the fly while the markets are melting down around you and everyone is panicking. And if your financial adviser is unable to provide you with a comforting answer as to his/her strategy for captaining your money through another 2008-like (or worse) correction, we have a few recommended advisers you may want to consider talking with.
  • Build your roof while the sun is shining – So many of the most valuable investments are not financial (emergency preparedness, energy efficiency, community, health  to name just a few). Use the gift of time we have now to invest in expanding your degree of resilience. If it’s been a while, take a fresh skim though our What Should I Do? Guide to identify any areas where you aren’t satisfactorily prepared. These are the investments that it’s infinitely better to have in place “a year early vs. a day late.”
  • Increase emotional fortitude – Being “wrong” in the eyes of society is trying. And it’s stressful for many, especially if your partner or others of those close to you don’t share your views. Keep learning by reading this site and a wide range of others, including those with opposing commentary. Develop your opinions based on the data you determine is most accurate – your ability to stand resolute against popular sentiment will be grounded in your confidence in the “big picture.” Seek support from the thousands of other Peak Prosperity readers who are wrestling with the same issue set you are, by participating in our Groups. We created them to help people support each other both virtually and “in person” within their local communities.
  • Develop an income loss plan – If we’re correct in our prediction of a major downdraft, a return to deep recession is likely, and with it, a return to higher unemployment. Loss of income is a stressful trauma, especially if it happens unexpectedly and is compounded by a hobbled job market. Take some time to assess your job’s level of vulnerability to another recession. If it’s higher than you’d like, ask yourself what you would do if a sudden layoff occurred. Start doing the work now to at least sketch out the path you would take if that happened. If possible, develop some relationships or related skills now that would give you an exceptional advantage, should you ever need to head down that route. The first third of our book, Finding Your Way to Your Authentic Career has a number of exercises that provide useful guidance for those looking to do this.
  • Develop an income enhancement plan – The resilience that comes with multiple income streams really helps you sleep at night, as you’re less vulnerable to having your entire life upended if a sudden pink slip appears. Also, having extra income to direct to other goals (retirement, education, homesteading, etc.) enables you to reach them faster. We’re all busy, but thinking creatively for a moment: What could you start doing today to secure extra income streams in the future? This is a topic that Chris often helps folks think through in his consultations.

Essentially, the approach here is to dismiss what is not in our control and focus on what we can best do with what is.

Be practical. Be prudent. Be dull to those watching you from the dance floor.

John Hussman signed off his latest report with the advice: “Risk dominates. Hold tight.”  I agree. Now is the time act with the courage of our convictions.

As Kipling put it, at the end of his poem:

If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
Or walk with Kings – nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man, my son!

~ Adam Taggart

 

Bail-Ins And Deposit Confiscation Confirmed At ‘Future of Banking in Europe’ Conference

Bail-Ins And Deposit Confiscation Confirmed At ‘Future of Banking in Europe’ Conference.

Today’s AM fix was USD 1,219.00, EUR 898.50 and GBP 743.07 per ounce.
Yesterday’s AM fix was USD 1,237.50, EUR 913.08 and GBP 754.30 per ounce.

Gold fell $32.20 or 2.57% yesterday, closing at $1,219.00/oz. Silver slid $0.84 or 4.2% closing at $19.15/oz. Platinum dropped $20.95, or 1.5%, to $1,336.25 /oz and palladium fell $9.78, or 1.4%, to $708.72/oz.

Gold advanced from nearly a five-month low, after the biggest one-day drop since October, as investors assessed whether the U.S. economy is strong enough to warrant a move away from ultra loose monetary policies.

Gold fell despite the data yesterday being mixed. It showed that while U.S. manufacturing unexpectedly accelerated in November at the fastest pace in more than two years, retail spending fell on the weekend after Thanksgiving for the first time since 2009. The overly indebted U.S. consumer is struggling which does not bode well for the consumer dependent U.S. economy.


Gold in US Dollars, 5 Year (Bloomberg)

Bulls took solace in the fact that the price falls came on very low volumes – volume was 20% below the average for the past 100 days at this time of day, data compiled by Bloomberg showed.

Gold is down 26% year to date and many analysts agree that it is now very oversold.  The 14-day relative-strength index fell to 30 yesterday, signaling to some analysts who study charts that the price may be set to rebound.

Physical demand picked up on lower prices overnight – particularly in China and Asia. In China, now the largest buyer of gold in the world, premiums of 99.99% purity gold climbed to about $11 an ounce from $7 on Monday on the Shanghai Gold Exchange (SGE).

Bail-Ins And Deposit Confiscation Coming Noonan Confirms At ‘Future of Banking in Europe’ Conference
A major conference on the future of banking yesterday heard contributions on a European banking union which is being negotiated by Eurozone finance ministers. One of the aspects of that union will be a ‘bail-in’ of deposits when banks fail in the future. Michael Noonan, Ireland’s Minister for Finance confirmed yesterday that bail-ins or deposit confiscation will be used.

The toolkit underpinning the Single Resolution Mechanism is provided for in the bank recovery and resolution proposal (BRR) which was agreed last June in Council under the Irish Presidency. The proposal provides a common framework of rules and powers to help EU countries manage arrangements to deal with failing banks at national level as well as cross-border banks, whilst preserving essential bank operations and minimising taxpayers’ exposure to losses.

One of the main pillars to the BRR framework to facilitate a range of actions by authorities are “resolution tools”. Noonan confirmed yesterday that resolution tools include the sale of business, bridge bank and asset separation tools and also the use of bailins.

The era of bondholder bailouts is ending and that of depositor bail-ins is coming.

Preparations have been or are being put in place by the international monetary and financial authorities for bail-ins. The majority of the public are unaware of these developments, the risks and the ramifications.

It is now the case that in the event of bank failure, your deposits could be confiscated.

Let’s be crystal clear: The EU, UK, the U.S., Canada, Australia and New Zealand all have plans for bail-ins in the event of banks and other large financial institutions getting into difficulty.

Download our Bail-In Guide: Protecting your Savings In The Coming Bail-In Era (11 pages)

Download our Bail-In Research: From Bail-Outs to Bail-Ins: Risks and Ramifications (51 pages)

 

 

GM Channel Stuffing Surges To Second Highest Ever | Zero Hedge

GM Channel Stuffing Surges To Second Highest Ever | Zero Hedge.

Confused why the various US manufacturing indices have been on a tear in the past few months? Perhaps the fact that GM dealer lots are so full of cars they just couldn’t wait for even more deliveries has something to do with it. Which is also why in addition to reporting sales numbers for November that were largely in line with expectations, amounting to 212,060 (even if total Chevy Volts sold YTD of 20.7K were -0.6% less than in the same period in 2012), or 13.7% more than last year (estimated called for 13.% increase), of which a whopping 51,705 was in the form of “channel stuffed” units to be parked on dealer lots.

In fact, as the chart below shows, in the past three months, GM channel stuffing has exploded and soared by 150K units (the most ever for a 3 month period) from 628.6K to 779.5K. This represents the second highest amount of channel stuffing and is lower only compared to the 788.2K units “stuffed” exactly one year ago.

And while the topic of channel stuffing is not new here, as we have been covering it closely for the past three years, it is of note that even “serious” media such as Bloomberg pointed out yesterday that across the entire US car industry, and not just GM, channel stuffing is now the highest it has been since 2005. Surely all this pent up demand is there for a reason: after all, as in every centrally-planned economy, if you build it they will surely come…

 

%d bloggers like this: