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End of Suburbia  |  Peak Oil News and Message Boards

End of Suburbia  |  Peak Oil News and Message Boards.

 

EROEI: Economics Without the Money

EROEI: Economics Without the Money.

Chris Mayer

Posted Mar 5, 2014.

“For some years now,” Tim Morgan writes in Life After Growth, “global average EROEIs have been falling, as energy resources have become both smaller and more difficult (meaning energy-costly) to extract.”

You may have heard of this concept called energy return on energy invested (EROEI). It looks at how much energy we expend in relation to how much energy we extract. Some, like Morgan, think this is very important.

Consequently, falling EROEIs have become the basis of a variety of dire forecasts…

Be skeptical of anything that seeks to analyze our economy by taking money out.

In these scenarios, we spend more and more energy just getting energy, and we have less and less for other discretionary items. As Morgan writes, “If EROEI falls materially, our consumerist way of life is over.”

I’m writing to you today to slay this flawed EROEI concept.

I have to say I used to be taken in by this argument. I wrote an issue of my Capital & Crisis newsletter a couple of years back with the headline “Crack This Code: EROEI — Why It Matters Now and What to Do About It.” I included a list of approximate EROEI ratios for various energy sources:

  • 1970s oil and gas discoveries: 30-to-1
  • Current conventional oil and gas discoveries: 20-to-1
  • Oil sands: 5-to-1
  • Nuclear: 4-to-1
  • Photovoltaic: 4-to-1
  • Biofuel: 2-to-1

I noted that such ratios were falling and concluded that a lower mix of EROEI sources means higher prices for many commodities, because “it will take more energy to produce them.”

It means nothing of the kind.

I would like to right my old error and convince you why EROEI is fatally flawed, so you don’t fall for it. I’ll use Morgan as the foil, because he is an articulate and strong proponent of the idea in his new book.

Morgan’s crucial assumption appears on page 5: “The economy is not primarily a matter of money at all. Rather, our economic system is fundamentally a function of surplus energy.”

This is the key to the whole EROEI argument. Morgan repeats it often. And it is completely wrong.

You can’t take money out of the equation! Money is what it’s all about. It is the essence of the economic life. It’s at the center of decision making. As economist Hyman Minsky said, “Money isn’t everything. It is the only thing.”

Be skeptical of anything that seeks to analyze our economy by taking money out. Households and firms make decisions based on money. They certainly don’t use EROEI, nor should they.

When a firm decides to drill a well or not, it does so on the basis of estimated costs and profits. It makes a decision based on some expected return — as measured in money. They are not the same. High-EROEI projects can be losers. Low-EROEI projects can be winners — as measured in profits and return on investment in money terms.

According to Morgan’s logic, you wouldn’t bother generating electricity…

Here is Robin Mills, currently with Manaar Energy (and once a petroleum manager for the Emirates national oil company in Dubai):

“Generating electricity, usually at a thermal conversion efficiency of less than 50% plus transmission losses, has an EROEI of much less than 1, but is still rational and economic because electricity is such a useful form of energy.”

Put another way, the money costs of the inputs are less than the money prices of the outputs. It works because… it’s profitable! People value electricity more than they value the inputs. Looked at through an EROEI lens, though, it doesn’t make sense.

You can build any scary resource scenario you want if you exclude money prices. If, say, falling ore grades were predictive of prices, then we would see continually rising prices for copper and other resources. Clearly, this isn’t the case. But this does not prevent people (usually geologists) from taking these moneyless concepts to make economic forecasts of higher prices.

A general rule of thumb: If it doesn’t take into account money prices, then it isn’t about the real-world economy as it exists today.

That’s my biggest objection to EROEI. But I’m not making a comprehensive case against EROEI here. That would take too long. I won’t get into how EROEI is calculated: there is no agreement and when you think about it, maybe it’s impossible to know with any accuracy worth relying on.

In the end, I think Morgan doesn’t really get modern money. He repeats an old myth about its origins. He doesn’t seem to know why fiat currency has value. (He says money is a “claim on real goods and services,” which only begs the question: Why do people accept dollars in exchange for real goods?) He doesn’t seem to understand the primacy of making a monetary profit in a market economy.

Contrary to Morgan, you can’t take money out and hope to understand the modern economy. You have to study money. And in markets, you have to make a money surplus (a profit) — or you are out of the game before long. I can’t say the same is true for EROEI, which is perhaps the best I can say against it.

You can ignore EROEI, but you can’t ignore money.

Sincerely,

Chris Mayer
for The Daily Reckoning

» Canadian Mounties Override Civilian Rule to Arbitrarily Ban, Confiscate Firearms Alex Jones' Infowars: There's a war on for your mind!

» Canadian Mounties Override Civilian Rule to Arbitrarily Ban, Confiscate Firearms Alex Jones’ Infowars: There’s a war on for your mind!.

RCMP turned thousands of law-abiding Canadian gun owners into criminals overnight

Adan Salazar
Infowars.com
March 5, 2014

The Royal Canadian Mounted Police are acting on their own authority to arbitrarily re-classify, ban and ultimately confiscate certain rifles, contemptible actions for which Canadian citizens seemingly have no recourse.

Last Wednesday, the RCMP made good on its past threats and turned tens of thousands of Canadians into criminals overnight when they re-classified the Swiss Arms Classic Green carbine, a Swiss-made rifle featuring military-style characteristics, declaring it “prohibited” even though the model has been sold in Canada since 2000. Until Monday, the Canadian feds hadn’t even offered an amnesty period for gun owners to turn in their newly illegal weapons.

Although the high quality rifles cost anywhere from $3,000 to $4,000, the Canadian government has made no indication it intends to compensate, purchase or otherwise reimburse gun owners, or gun shops, for their surrendered firearms.

On Friday, after the country’s Public Safety Minister had publicly stated he would “take action” against the assault on law-abiding citizens’ rights, the Mounties again banned another gun, a Canadian version of the CZ 858, which had been specifically modified to meet domestic laws.

Troubling to many Canadians is the RCMP banned these guns without the authority of elected officials. “The elected government of the day had already made it clear it did not want to go this route. The Mounties did it anyway,” Sun News’s Brian Lilley reported.

“It is a dark day when police, not the people’s elected representatives, can suddenly transform thousands of ordinary, law-abiding Canadians into criminals with the stroke of a bureaucratic pen,” writes the Winnipeg Sun’s Lorne Gunter.

As Gunter explains, the High River gun grab of June 2013 set the precedent for mass gun confiscation. Mirroring scenes from the fallout of Hurricane Katrina, Mounties in the wake of a devastating flood “decided arbitrarily to break into the homes of nearly 2,000 law-abiding residents and strip the places of guns because they feared residents’ anger might be turned on police or politicians once the town’s forced evacuation was lifted.”

“The government needs to rein in the Mounties or they will find they’re no longer in control,” Lilly declares. “That means the government not only needs to override the decree from the Mounties, but strip them of any power they have or think they have to do this again.”

One gun shop owner expressed to CBC News that Mounties are disarming citizens to have a monopoly on force. “There is a movement within the RCMP and they don’t like to see guns in the hands of anybody but themselves.”

Canadian gun owners who refuse to relinquish their firearms can face jail time up to three years, Sun News reported.

Of course, the irony of the RCMP’s ban and confiscation is that they are targeting a gun the Swiss government actually entrusts its citizens to arm themselves with, illustrating the Mounties and Canadian government’s draconian disdain for its people’s rights.

 

This article was posted: Wednesday, March 5, 2014 at 1:41 pm

» Canadian Mounties Override Civilian Rule to Arbitrarily Ban, Confiscate Firearms Alex Jones’ Infowars: There’s a war on for your mind!

» Canadian Mounties Override Civilian Rule to Arbitrarily Ban, Confiscate Firearms Alex Jones’ Infowars: There’s a war on for your mind!.

RCMP turned thousands of law-abiding Canadian gun owners into criminals overnight

Adan Salazar
Infowars.com
March 5, 2014

The Royal Canadian Mounted Police are acting on their own authority to arbitrarily re-classify, ban and ultimately confiscate certain rifles, contemptible actions for which Canadian citizens seemingly have no recourse.

Last Wednesday, the RCMP made good on its past threats and turned tens of thousands of Canadians into criminals overnight when they re-classified the Swiss Arms Classic Green carbine, a Swiss-made rifle featuring military-style characteristics, declaring it “prohibited” even though the model has been sold in Canada since 2000. Until Monday, the Canadian feds hadn’t even offered an amnesty period for gun owners to turn in their newly illegal weapons.

Although the high quality rifles cost anywhere from $3,000 to $4,000, the Canadian government has made no indication it intends to compensate, purchase or otherwise reimburse gun owners, or gun shops, for their surrendered firearms.

On Friday, after the country’s Public Safety Minister had publicly stated he would “take action” against the assault on law-abiding citizens’ rights, the Mounties again banned another gun, a Canadian version of the CZ 858, which had been specifically modified to meet domestic laws.

Troubling to many Canadians is the RCMP banned these guns without the authority of elected officials. “The elected government of the day had already made it clear it did not want to go this route. The Mounties did it anyway,” Sun News’s Brian Lilley reported.

“It is a dark day when police, not the people’s elected representatives, can suddenly transform thousands of ordinary, law-abiding Canadians into criminals with the stroke of a bureaucratic pen,” writes the Winnipeg Sun’s Lorne Gunter.

As Gunter explains, the High River gun grab of June 2013 set the precedent for mass gun confiscation. Mirroring scenes from the fallout of Hurricane Katrina, Mounties in the wake of a devastating flood “decided arbitrarily to break into the homes of nearly 2,000 law-abiding residents and strip the places of guns because they feared residents’ anger might be turned on police or politicians once the town’s forced evacuation was lifted.”

“The government needs to rein in the Mounties or they will find they’re no longer in control,” Lilly declares. “That means the government not only needs to override the decree from the Mounties, but strip them of any power they have or think they have to do this again.”

One gun shop owner expressed to CBC News that Mounties are disarming citizens to have a monopoly on force. “There is a movement within the RCMP and they don’t like to see guns in the hands of anybody but themselves.”

Canadian gun owners who refuse to relinquish their firearms can face jail time up to three years, Sun News reported.

Of course, the irony of the RCMP’s ban and confiscation is that they are targeting a gun the Swiss government actually entrusts its citizens to arm themselves with, illustrating the Mounties and Canadian government’s draconian disdain for its people’s rights.

 

This article was posted: Wednesday, March 5, 2014 at 1:41 pm

Can we depend on a "Call on OPEC", or has OPEC peaked? » Peak Oil BarrelPeak Oil Barrel

Can we depend on a “Call on OPEC”, or has OPEC peaked? » Peak Oil BarrelPeak Oil Barrel.

Steve Kopits, in his recent presentation at Columbia University, ridiculed the IEA’s often used term a “Call on OPEC“. That is, the IEA looks at the world oil supply and if they see a supply shortage looming on the horizon they then issue a “Call on OPEC” to supply x number of extra barrels and fill that gap. But the next time the IEA issues such a call can OPEC deliver? Or, is OPEC already producing every barrel they possibly can.

One thing for sure, there are eight OPEC countries that are definitely producing every barrel they possibly can, those countries are Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela. The chart below is the combined production of those 8 nations.

All charts in this post are “Crude Only” in kb/d with the last data point Jan. 2014.

OPEC 8

There can be no doubt that all eight of these OPEC countries are producing every barrel they possibly can. While it is true that Iran and Libya have political problems that is holding their production back, but political problems in that part of the world are likely to get worse rather than better.

But what about the other four OPEC nations. The chart below shows the combined production of Iraq, Kuwait, Saudi Arabia and the UAE.

OPEC 4

It is my contention that not only are these four OPEC nations producing every barrel they possibly can but that they have little prospect of producing much more. I will examine each country one by one.

Iraq has not been subject to OPEC quotas since the the beginning of Mr. Bush’s war and make no bones about producing every barrel they can and hope to produce more, a lot more.

Iraq

But their production has been relatively flat for almost two years. They may be able to squeeze out a few more barrels in the future but any increase will be very slow in coming.

But what about the other three. First Kuwait.

Kuwait

Kuwait initiated Project Kuwait in 1997 in hopes of slowing the decline of Burgen and increasing production in their northern fields. The project was delayed by political bickering about bringing in outside contractors but finally got underway in early 2007 only to be delayed a year later by the crash. But the project, really a massive infill drilling program, got underway again in early 2011 and has managed to increase their production by some 200,000 bp/d over their 2008 peak. That simply means more infill drilling. But they are clearly at peak right now.

However their production has been flat for almost two years. Recently they announced an effort to increase their “Production Capacity” by another 150 kb/d. Like all other OPEC countries they claim to be able to produce a few more barrels than they are actually producing.

The United Arab Emirates?

UAE

The UAE has learned the same trick as every other nation with tired old fields. That is if you drill new horizontal wells that run along the length of the top of the reservoir, they can increase production slightly or at least slow the decline rate. They are looking toppy right now and can expect decline to set in soon.

That leaves Saudi Arabia.

Saudi Arabia

Saudi Arabia was among the first nations in the world to initiate new infill drilling programs. Before they they did this their decline rate of their old fields was averaging 8% per year. They claimed, with that drilling program, they got that decline rate down to almost 2% per year. But that was over eight years ago. I suspect that the decline rate has increased considerably since then.

Saudi has however, been able to keep from declining in net production by bringing on new fields, or rather old mothballed fields back on line. The most recent being Khurais which was brought on line in 2009 and Manifa which came on line last year with 500,000 bp/d and is ramping up to its full capacity of 900,000 bp/d this year. The spike you see in 2013 is Manifa ramping up.

Saudi may be able to produce a few more barrels but not very many. But as, Sadad Al Husseini a former executive at Aramco, said in 2012 “Saudi is producing flat out”. If they did manage to squeeze out a few more barrels it would be only temporary. Saudi is about to go into decline, or at least that is my opinion.

Any “call on OPEC” by the IEA would likely produce about as much new oil as a call on their grandma.

Note: I send out an email notification to about 100 people when I have published a new post. If you would like to be added to that list, or your name removed from it, please notify me at: DarwinianOne at Gmail.com

Can we depend on a “Call on OPEC”, or has OPEC peaked? » Peak Oil BarrelPeak Oil Barrel

Can we depend on a “Call on OPEC”, or has OPEC peaked? » Peak Oil BarrelPeak Oil Barrel.

Steve Kopits, in his recent presentation at Columbia University, ridiculed the IEA’s often used term a “Call on OPEC“. That is, the IEA looks at the world oil supply and if they see a supply shortage looming on the horizon they then issue a “Call on OPEC” to supply x number of extra barrels and fill that gap. But the next time the IEA issues such a call can OPEC deliver? Or, is OPEC already producing every barrel they possibly can.

One thing for sure, there are eight OPEC countries that are definitely producing every barrel they possibly can, those countries are Algeria, Angola, Ecuador, Iran, Libya, Nigeria, Qatar and Venezuela. The chart below is the combined production of those 8 nations.

All charts in this post are “Crude Only” in kb/d with the last data point Jan. 2014.

OPEC 8

There can be no doubt that all eight of these OPEC countries are producing every barrel they possibly can. While it is true that Iran and Libya have political problems that is holding their production back, but political problems in that part of the world are likely to get worse rather than better.

But what about the other four OPEC nations. The chart below shows the combined production of Iraq, Kuwait, Saudi Arabia and the UAE.

OPEC 4

It is my contention that not only are these four OPEC nations producing every barrel they possibly can but that they have little prospect of producing much more. I will examine each country one by one.

Iraq has not been subject to OPEC quotas since the the beginning of Mr. Bush’s war and make no bones about producing every barrel they can and hope to produce more, a lot more.

Iraq

But their production has been relatively flat for almost two years. They may be able to squeeze out a few more barrels in the future but any increase will be very slow in coming.

But what about the other three. First Kuwait.

Kuwait

Kuwait initiated Project Kuwait in 1997 in hopes of slowing the decline of Burgen and increasing production in their northern fields. The project was delayed by political bickering about bringing in outside contractors but finally got underway in early 2007 only to be delayed a year later by the crash. But the project, really a massive infill drilling program, got underway again in early 2011 and has managed to increase their production by some 200,000 bp/d over their 2008 peak. That simply means more infill drilling. But they are clearly at peak right now.

However their production has been flat for almost two years. Recently they announced an effort to increase their “Production Capacity” by another 150 kb/d. Like all other OPEC countries they claim to be able to produce a few more barrels than they are actually producing.

The United Arab Emirates?

UAE

The UAE has learned the same trick as every other nation with tired old fields. That is if you drill new horizontal wells that run along the length of the top of the reservoir, they can increase production slightly or at least slow the decline rate. They are looking toppy right now and can expect decline to set in soon.

That leaves Saudi Arabia.

Saudi Arabia

Saudi Arabia was among the first nations in the world to initiate new infill drilling programs. Before they they did this their decline rate of their old fields was averaging 8% per year. They claimed, with that drilling program, they got that decline rate down to almost 2% per year. But that was over eight years ago. I suspect that the decline rate has increased considerably since then.

Saudi has however, been able to keep from declining in net production by bringing on new fields, or rather old mothballed fields back on line. The most recent being Khurais which was brought on line in 2009 and Manifa which came on line last year with 500,000 bp/d and is ramping up to its full capacity of 900,000 bp/d this year. The spike you see in 2013 is Manifa ramping up.

Saudi may be able to produce a few more barrels but not very many. But as, Sadad Al Husseini a former executive at Aramco, said in 2012 “Saudi is producing flat out”. If they did manage to squeeze out a few more barrels it would be only temporary. Saudi is about to go into decline, or at least that is my opinion.

Any “call on OPEC” by the IEA would likely produce about as much new oil as a call on their grandma.

Note: I send out an email notification to about 100 people when I have published a new post. If you would like to be added to that list, or your name removed from it, please notify me at: DarwinianOne at Gmail.com

Welcome to the Currency War, Part 12: Bankrupt Rome and Soaring Euro-Bonds

Welcome to the Currency War, Part 12: Bankrupt Rome and Soaring Euro-Bonds.

by John Rubino on February 28, 2014 · 14 comments

Only in a world totally corrupted by easy money could the following two things be announced on the same day. First:

 

European Bonds Surge as ECB Stimulus Confines Crisis to Memory

Yields on the euro area’s government bonds have never been lower as the potential for extended European Central Bank stimulus helps exorcise memories of the region’s sovereign debt crisis. 

The bond-market rally is broad based, encompassing both core economies such asFrance and also peripheral markets including Greece, which was pushed to the brink of exiting the currency bloc during the region’s financial woes. Another of those nations, Portugal, took a step toward exiting an international bailout program today as it bought back bonds, while Italy, supported in the turmoil by ECB bond purchases, sold five-year notes at a record-low rate.

“Investors are starting to look at the non-core European bond markets as a viable investment alternative again,” said Jussi Hiljanen, head of fixed-income research at SEB AB inStockholm. “Further ECB actions have the potential to maintain the tightening bias on those spreads,” he said, referring to the yield gap between core nations and the periphery.

The average yield to maturity on euro-area bonds fell to a record 1.6343 percent yesterday, according to Bank of America Merrill Lynch indexes. It peaked at more than 6 percent in 2011, the data show.

Italy’s 10-year yield fell seven basis points to 3.47 percent after touching 3.46 percent, a level not seen since January 2006. Portugal’s 10-year yield dropped four basis points to 4.81 percent and touched 4.78 percent, the least since June 2010, while Ireland’s two-year note yield and Spain’s five-year rates dropped to records.

Then, at about the same time:

 

Rome days away from bankruptcy

Eternal city warns it will go bust for the first time since it was destroyed by Nero 

Matteo Renzi, the Italian prime minister, came under pressure on Thursday as the city of Rome was on the brink of bankruptcy after parliament threw out a bill that would have injected fresh funding.

Ignazio Marino, Rome mayor, said city services like public transport would come to a halt and that he would not be a “Nero” – the Roman emperor who, legend has it, strummed his lyre as the city burnt to the ground.

Marino said that Renzi, a centre-left leader and former mayor of Florence who was only confirmed by parliament this week, had promised to adopt urgent measures to help the Italian capital at a cabinet meeting on Friday.

The newly-elected mayor faces a budget deficit of 816 million euros ($1.1 billion) and the city could be placed under administration if he does not manage to close the gap with measures such as cutting public services.

“Rome has wasted money for decades. I don’t want to spend another euro that is not budgeted,” Marino said, following criticism from the Northern League opposition party which helped shoot down the bill for Rome in parliament.

The draft law would have included funding for Rome from the central government budget as a compensation for the extra costs it faces because of its role as the capital including tourism traffic and national demonstrations.

Other cash-strapped cities complained it was unfair. But Marino warned there could be dire consequences. “We’re not going to block the city but the city will come to a standstill. It will block itself if I do not have the tools for making budget decisions and right now I cannot allocate any money,” he told the SkyTG24 news channel.

Marino said that buses may have to stop running as soon as Sunday because he only had 10 percent of the money required to pay for fuel in March.

He added: “With the money that we have in the budget right now, I can do repairs on each road in Rome every 52 years. That’s not really maintenance.”

How is it that Italy is able to borrow money at low and falling rates – which indicates that borrowers are confident of its ability to pay its bills – while its major city, far more important to that country than New York or Los Angeles is to the US, slides into bankruptcy?

The answer is that Rome is irrelevant in comparison with two other facts. First, Europe is slipping into deflation, which generally leads to lower bond yields. Second, the European Central Bank is virtually guaranteed to respond to fact number one with quantitative easing on a vast scale.

So the bond markets, far from rallying on the expectation of a eurozone recovery, are rising in anticipation of the opposite: a new round of recession/deflation/instability that forces the abandonment of even the pretense of austerity and the adoption of aggressively easy money.

In this scenario, a Roman bankruptcy is actually a good thing because it pushes the ECB, Bundesbank, Bank of Italy and the other relevant monetary entities to stop dithering and start monetizing debt in earnest. Once it gets going, the goal of the program will be to refinance everyone’s debt at extremely low rates, push down the euro’s exchange rate versus the dollar, yen and yuan, and shift the currency war front from Europe to the rest of the world. The race to the bottom continues.

The rest of this series is available here.

Activist Post: 7 Ideas to Help Protect the Honeybee

Activist Post: 7 Ideas to Help Protect the Honeybee.

Alex Pietrowski
Activist Post 

With all of the immediate problems facing people these days, it is difficult to be concerned and proactive about the looming environmental crises that will affect us in big ways in the not-too-distant future. After all, who has time to do anything about radiation in the Pacific Ocean when there is still fish in the markets and you can’t find a job to pay the bills?

One of the greatest coming ecological catastrophes for the human race is the global collapse of many bee species which are largely responsible for pollinating our food crops as well as wild plants.

Without bees, human kind will suffer a terrible famine, and in some areas bees have already lost up to 90% of their colonies. Many scientists have linked the collapse of bee colonies to the overuse of a cocktail of varied herbicides, pesticides, and fungicides used in modern agriculture and modern landscaping, and specifically the overused class of poisons, neonicotinoids.

This is a disaster of Biblical proportions in the making, but at present there is still food on the shelves at the local grocery store, so it doesn’t feel like an emergency to most. Furthermore, the institutions we should be able to rely on for global leadership in managing a crisis like this are simply not available to direct their full attention and resources to ecological problems like bugs andradiation, for they seem to have become full-time agents of the banks and the warmongers.

There are things we all can do to contribute to the well-being and our bee populations. Here are a few simple guidelines for making your home, garden and place of work more friendly to bees:

1. Go organic. Stop using chemical sprays, detergents, perfumes, pesticides, herbicides and fungicides.

2. Plant bee-friendly plants and flowers in your yard and garden. There are abundant resources online for finding the best plants for your area and climate.

3. Give bees a home by building a bee-hive for them. There are many designs and ideas online, so it should be easy to find the best design for your space and for your climate. Doing so will assist your garden’s overall production greatly as well. You can buy colonized hives of many species ofhoneybees, and finding the right one for your home and garden is easy to do with some local Internet searches.

4. If you absolutely cannot co-exist with a bee colony on your property, do not have it terminated. Instead find an experienced bee-removal company that can safely and ecologically relocate the hive to a more hospitable place for bees.

5. Demand that local government and businesses adopt bee-friendly policies by contacting them and organizing concerned members of your community. Demand that they stop contracting with pest-control companies that use thetoxic poisons that are causing colony collapse disorder.

6. If you are fully inspired to participate in this movement, you might form a co-op of concerned people and set up a bee conservatory to save bees, learn more about them and share the joys of apiculture with your community.

7. Become active in the growing global movement to stop genetically engineered seed companiesfrom monopolizing all agriculture on planet earth and making us completely dependent on their chemical applications, which are killing off bees.

As an inspiring example of how a community can come together in support of this most important link in our global food-chain, take a look at the work of group Co’Oleel Caab on the Yucatan peninsula in Mexico.

In this video, group founder and president Anselma Chale Euan explains how a group of 20 local women has come to be a global example of how ordinary people can contribute to the monumental task of stewarding a future for the honeybee. Their co-op works primarily with the stingless bee, Melipona Beechi, a species that was traditionally cultivated by men during the ancient times of the Mayan empire. Their work has been a learning process but they have developed their hives and have come to care for over 20,000 bees, producing over 48 liters of honey a year.

Not wanting to give in so easily to our ecological demise, good people the world over are taking matters into their own hands and working to protect bees within their own communities. And really, this is how it should be. Ordinary people should have the willingness to get involved in serious communal issues to create the types of futures that we all would like to see.

Working with bees is an inspirational way to learn more about nature, create a future for our children and to participate in the solution to one of the most serious looming crises that confronts the human race.

Resources:

Alex Pietrowski is an artist and writer concerned with preserving good health and the basic freedom to enjoy a healthy lifestyle. He is a staff writer for WakingTimes.com and an avid student of Yoga and life.

Bruce Berkowitz’s Bogus Bombast | David Stockman's Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

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