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Some predictions for 2008 and for the new President

by Jerome a Paris Sun Dec 30th, 2007 at 06:20:39 PM EST

Bonddad has already provided a good overview of what to expect on the financial front in this diary, but I'd like to take a wider perspective on what's likely to happen in the coming year, and how the beginning of the next presidency could look like.

I'll look at:

  • macroeconomics


  • oil/energy/commodities


  • Iraq, Iran, China and other geopolitical trends


  • the blame game


macroeconomics

As bonddad has noted, the news coming on the economic front are likely to be overwhelmingly bad, with a tumbling real estate market, interest rate resets, foreclesures and all the accompanying pain. This will eventually take its toll on consumption and on jobs, as debt becomes less available (or more expensive), construction and finance sectors continue to fire people, and people cut on non-essential spending. Note that this is likely to be a slow motion process.

But bad as this may seem, the worst is likely to be what happens to the banking sector. Right now, nobody knows what skeletons will be found in banks' balance sheets, and banks don't trust one another. Credit markets are zombie-like, functioning poorly or not at all, and banks have trouble funding normal operations, let alone aggressive new lending. Many corporations have clean balance sheets and can hold out for a while, but small and medium entreprises may not last as long, and will feel the credit crunch at some point. And the biggest question remains as to the situation of the main investment banks, which have tons of impossible to assess stuff on their books, and even of some big commercial banks heavily involved in real estate and/or structure vehicles. A full-fledged banking crisis is still very much possible.

Stockmarkets have already sold bank and retail stocks to some extent, and preferred companies exposed to world markets, where profits have been strong (and even stronger when expressed in dollars, thanks to the currency's weakness). This is likely to continue, but weak domestic consumption is unlikely to allow profits to keep going up as they have in recent years, however you skew the sharing of value added between wages and profits. Some suspect that stock markets have remained strong in the second half of 2007 because all the money that could be taken out of the commercial paper markets was reinvested there - but that was a one shot boost. Let's say that I don't think stock markets will go up in the coming year.

All these news will not prevent the right from doing two absolutely contradictory things (not that this has ever been a problem for them:

The goal, of course, is to hide the pain for as long as possible, and then dump it wholesale in the lap of the new president, which will then be blamed for all that's suddenly going wrong. I'd wager that "Democrat elected, Economy crashes" headlines are already ready to roll... More seriously, I expect the 2006 Congress to be blamed (via things like the increased minimum wage, which the right hates and blathers about incessantly).

My recommendation here, for what it's worth, is to emphasise as much as possible that the economic crisis is there, and that it is a Republican Recession. They had all the power (including a friendly Fed, which kindly let them blow the budget surpluses they inherited, and all the vetoes of the Bush presidency in the past year), it's their mess.

But please, let's not have Democrats caught unawares when Broder et al. suddenly start talking about the need for accountability in government, and the responsibility of the new crowd for the economy (and the need for bipartisanship, of course, to get the market "reforms" that will solve the situation).

oil/energy/commodities

To be frank, I have no idea where oil prices will go, because there are some very conflicting trends, and it's not clear to me which one will prevail.

An economic slowdown suggests that prices should go down somewhat. There's also the expectation of a surge of new projects coming onstream in 2008 (by the way, if you want to contribute to the effort by the Oil Drum crowd to make that database of oil projects as comprehensive as possible, please do help, it's a wiki page)  which might help the supply situation in the short term.

On the other hand, these projects have to compensate for the decline of existing fields, and to cope with vastly increasing demand from booming emerging economies (like China and India) and from oil exporters themselves, which are enjoying an economic boom on the back of higher oil prices, and are often subsidizing gas for their populations - and have seen massive increases in car ownership recently.

The fact that oil prices are close to record levels now, despite the strong probability of a recession now being pretty much accepted by markets, suggests that the trend is still up rather than down, unless the economic crash is more brutal than expected. (I'll have a new Countdown diary where you can all bet on where the price will be in a year's time, once i've announced the winner of this year's bet once the final price is in tomorrow).

Add to that the biofuels boom, well underway despite the increasing backlash against that wasteful "solution", and you have a direct impact on food prices as well.

And the commodity markets are likely to remain strained given the incredible appetite from China and elsewhere.

The impact at home is likely to be persistent inflation. Energy and food are stipped of the CPI which the Fed and Wall Street look at, because they usually are volatile, but the long upwards trend they are in suggests that it is increasingly unrealistic to ignore these price increases, as they apply to items for which consumption can only decrease very little in the short term. Which means less disposable income for many.

Expect, of course, more push to open oil production in Alaska or in offshore areas, and more bellicose mocking of the environmentalists who are, of course, the real cause of higher energy prices by preventing investment in resources at home.

Expect more switch to coal as a "cheap" and "plentiful" (it is nether, in reality, but they are only talking about the monetary costs borne by corparations in digging up and burning the stuff, and about the next few years) and homegrown, and, in all likelihood, more calls for nuclear power.

Massive plans to support renewable energies seem like a no-brainer to me (but then I work in the industry, so I'm naturally biased) - they create a lot more jobs (many of them non-offshorable by nature: wind farms can only be serviced locally), and these a good quality jobs in manufacturing and local construction and high-tech maintenance services; they help reduce carbon emissions and lower fuel imports and, most important, they are already cost-competitive. They can be the core plank of a massive New Deal/Apollo programme, if the political will were there.

This is a no-brainer. Seriously. Big industry and venture capital are already investing significant numbers. A public boost can change the scale of the effort and make it have a material impact on everything - the economy, the energy balance, climate change, local development, you name it.

Iraq, Iran, China and other geopolitical trends

This is where things gets murkier, and where the unexpected is most likely to happen and change everything.

But still. The Iraqi mess is there and not going away, and will eat into the early years of the next presidency. I can see the rightwing noise machine blaming the next president whether s/he chooses to stay (incompetence, endangering troops, etc...) or leave ("cut-and-run", "conceding defeat at home when all was going well over there", etc...). I can see stories about poorly treated veterans suddenly been given a lot of air time - and of course the new administration will be blamed for that.

Iran. I bet that nothing much will happen there. There will be more noise, and a lot of diplomatic theater, and Will Kristol will use his new tribune in the NYT to call for war, but the Bush administration will continue to be contained by the combination of foot-dragging by Europeans, grumbling by Putin and the odd Iranian gesture. I may be completely wrong, but we won't hear much about Iran once the new president is elected. There is no real underlying issue there - the sense of crisis has been manufactured by the Bush administration all along. A sane president will just let diplomats work and keep the issue out of the headlines.

China. The big year for them. The Olympics.They are on display. The very year when their trade surplus (with both Europe and the US) threatens to be so big as to be macro-economically dangerous, and politically untenable in the West. The year when their coal and oil imports become so massive that they turn into full-fledged, open, security issues for them. When carbon emissions become an even more burning (pun intended issue) and they are on the hot seat, as their per capita emissions reach that of some European countries. And the year when we know if the big financial crisis catches up with them or not.

Russia. Expect Russia to continue its tit-for-tat with the Bush administration and its European lackeys. Expect a big confrontation over Kosovo (this is my sure-thing bet for naming one of the big crises of the coming year). Expect Europeans, against all odds, to have no spine against the White House fore the rest of the year - but to fight the next president quite strongly on carbon emissions...

And of course, all the wild cards. Pakistan. Afghanistan (NATO has lost over there. How much tme will be needed to admit it?). A famine in Africa (food is getting expensive) A massive pollution event in China. A terrorist incident on vital infrastructure anywhere. And, as befits a president who was warned, upon his arrival in the White House, that the 3 main threats to his country were a terrorist attack on New-York, a hurricane in New Orleans or an earthquake in California, I'd worry about being in California this year... and (tinfoil hat for a second) about the state fo emergency that this might justify.

the blame game

As indicated above, the obvious strategy of the rightwing noise machine will be to claim, against all evidence, that all is well until the end of the year and then, brutally, to switch to relentless coverage of all that's bad - all that's been bad, but suddenly needs urgent action NOW.

The economic crisis will be blamed on too much red tape, and too high taxes (AMT here we come). Soaring helathcare costs on too much regulation and interference by government. Energy prices on restrictions on domestic drilling. Iraq will be blamed on the defeatists and terorist lovers at home.

The only way to counter this is to speak louder than them. To talk about inequality now. About Murder by Spreadsheet. About jobs manufacturing solar panels. And about the overriding ideology of corporate profits, which has been transcribed in government action by the Republicans since 2001, and which results in stagnant wages, weaker benefits, skyrocketing heathcare costs, inflation, and the rich gorging, gorging, gorging.

They won't give it up without a fight. But you have to be ready for a fight where the landscape is dramatically changed, with a crashing economy, a tense energy balance, and a hostile world.

Display:
http://www.dailykos.com/storyonly/2007/12/30/145658/56

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Dec 30th, 2007 at 06:21:02 PM EST
A dollop of magical thinking from our hard-nosed Dear Leader...
And, as befits a president who was warned, upon his arrival in the White House, that the 3 main threats to his country were a terrorist attack on New-York, a hurricane in New Orleans or an earthquake in California, I'd worry about being in California this year...


We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Sun Dec 30th, 2007 at 06:30:32 PM EST
I just like the symmetry of it. It's maths!

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sun Dec 30th, 2007 at 06:48:51 PM EST
[ Parent ]
Are you familiar with the English phrase , "Third times the charm" ?

There's a belief that when bad things happen they happen in threes.  Like when two old people die right after one another, everyone who's old who knows them thinks whether they're next.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Dec 30th, 2007 at 10:15:55 PM EST
[ Parent ]
In French, jamais deux sans trois.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 31st, 2007 at 03:39:55 AM EST
[ Parent ]
ManfromMiddletown:
"Third times the charm"
afew:
jamais deux sans trois
¡No hay dos sin tres!

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 07:14:26 AM EST
[ Parent ]
I actually happened to be in the Bay Area during the last "Halloween earthquake" in East San Jose on Oct. 30: it was a 5.6, the most powerful since the deadly Loma Prieta earthquake of Sept. 1989.

It has renewed the attention on the USGS geologists works and the two major faults in the East Bay: the Calaveras and the Hayward faults. Scientists now estimate that a damaging earthquake (7.2 or more!) is now even more likely, something like the 1906 Great San Francisco quake.

See the Merc's coverage here. As for me, I'm living in France now.

by Bernard (bernard) on Mon Dec 31st, 2007 at 10:20:40 AM EST
[ Parent ]
Strangely, i visited my home San Francisco at the same time.  I don't believe i told J about this (though i may have), but it was my first visit in 6 years.  i also had to spend time right in the fire zone in San Diego, so my German friends asked me if i wasn't scared going right into the flames.  i told them i was far more scared going back to the Bay, because i "knew" there was some shakin' coming... sometime.

Of course, on my second nite there, while staying with friends in the Presidio just a few minutes walk to the reclaimed Bay wetlands of Crissy field, the temblor struck with enough force to get all of us experienced shake survivors out into the cool night.  5.6 is just enough to get your blood boiling, but more important, it reawakens one's understanding of just how bad a big one will be.

Regardless of the engineering design standards.  i would not wish anyone to be near the Hayward fault if that gets struck, though several million are already there.  It's even worse in downtown LA, where the recent discovery of a previously unknown fissure has caused the most horrible computer sims i've ever seen.

Let's hope that J's prognostication works best in the banko/politica world, though Cali is sometime gonna go through hell.  It'll be harder for amurka to write off the 6th largest economy in the world than it was for that poor black music city they allowed to be destroyed.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Dec 31st, 2007 at 11:34:03 AM EST
[ Parent ]
Crazy Horse:
It'll be harder for amurka to write off the 6th largest economy in the world than it was for that poor black music city they allowed to be destroyed.

Nah - Huckabee will just explain its God's vengeance on liberals and gays....

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Dec 31st, 2007 at 12:12:34 PM EST
[ Parent ]
It takes more than a big earthquake to destroy California: it already happened in 1906 and the folks rebuild and moved on.

Funny, these kind of doom-n-gloom predictions are often heard in Southern and Eastern states where devastating hurricanes, tornadoes, large scale flooding or crippling snow storms are certainly not a once in twenty years occurrence...

by Bernard (bernard) on Mon Dec 31st, 2007 at 12:58:05 PM EST
[ Parent ]
And if California slides into the ocean
Like the mystics and statistics say it will
I predict this motel will be standing until I pay my bill

Warren Zevon

(Although I'll probably get in trouble for quoting both Mystics, and statistics in the same diary) ;-)

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Sun Dec 30th, 2007 at 06:55:08 PM EST
[ Parent ]
You can check out any time you like...but you can never leave...

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Sun Dec 30th, 2007 at 08:13:26 PM EST
[ Parent ]
Bill Hicks;-

Ah, it's gone. All the shitty shows are gone, all the idiots scremin' in the wind are dead, I love it. Leaving nothing but the cool, beautiful serenity called.....Arizona Bay. That's right, when LA falls in the fuckin ocean and is flushed away like a giant turd, all it will leave is Arizona Bay.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 31st, 2007 at 10:57:08 AM EST
[ Parent ]
I know you don't really mean that about LA.  We both agree the amurka needs some shaking up, but that is just gong to be too painful.  Let's agree that some power outages...

Besides, there's a truly great side to LA.  It's just that it never should have been built in the first place, people shouldn't live where they have to steal water.  But there's a thriving independent arts scene there, some driven from Frisco by the internet bubble.  and my son.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Dec 31st, 2007 at 11:40:31 AM EST
[ Parent ]
That was Bill Hicks, not me. But he told it better.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Mon Dec 31st, 2007 at 12:54:50 PM EST
[ Parent ]
sorry, H, my blind, i have no idea from Mr. Hicks.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Mon Dec 31st, 2007 at 02:24:55 PM EST
[ Parent ]
Right here in the US I have seen a story about cell phone towers going down after being stripped of their copper wire.  I salute this as a green "crime".

There is a small faction of Americans who spell President as it applies to President of the United States as pResident.  The full meaning of this is that this faction of Americans does realize government and corporate have merged into one and global corporations wield power far and above any government worldwide.  We have interesting debates about who the next pResidential "selectee" will be.

For 2008.
Things destructive to America, Americana, American greatness will continue to dominate English speaking media.

A clothing tycoon makes a new line of tazer proof sweatshirts under the logo "Taze me Bro".

Suburban homeowners start plowing their lawns up in favor of Victory Gardens.

I will get right on the boycott the Olympics campaign.  Thank you for pointing that out.

Really, people here are pissed, even if they know not why and I fully intent to sit upon my Apocalyptic horse and continue to point that out.

Still 50/50 the US makes it intact until next summer.  Chimpy may not "go out quitely", Pakistan as Iran/Iraq's replacement "enemy" is being studied.

by Lasthorseman on Sun Dec 30th, 2007 at 07:03:15 PM EST
Good diary, Jérôme. Just one remark:

China... The year when their coal and oil exports become so massive that they turn into full-fledged, open, security issues for them.

I think you meant imports...

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

by Melanchthon on Sun Dec 30th, 2007 at 07:43:02 PM EST
My prediction?

Tensions in Boliva rise, and the eastern Santa Cruz region (where the oil and gas is at) declares independence.  The rest of South America looks on in horror, and the Chileans debate whether to intervene as winter approaches in May, worried about maintaing natural gas shipments from the country. Chavez announces that he will support the Bolivian government, and Argentina opens its territory to allow Venezuelan troops to pass north and aid the Bolvian government.  What happens after this I don't know, but I imagine that the rest of the continent will be hard pressed to not take sides.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Sun Dec 30th, 2007 at 10:25:36 PM EST
Have you read news from SAmerica that lead you to think this is a possibility?  And what kind of USG involvement do you see?

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Wed Jan 9th, 2008 at 01:14:37 PM EST
[ Parent ]
Your Diary seems to be mostly about the USA.  I would be interested in your views on how the EU will be different and on whether it has the momentum, critical mass and cohesion to withstand many of the negative trends you outline.

Sarkozy seems hell bent on confronting the public sector unions at some stage which will result in a lot of disruption, German exports must be effected by the high Euro, and the British financial services sector will be suffering disproportionately to the rest of Europe.  

But China will invest more of its surplus cash in Europe, Ireland and the accession states will continue to grow at a reasonable pace, the alternative energy (and building insulation) industry is growing rapidly, tighter legislation will enforce more efficient cars, and the EU reform treaty will be ratified and give some impetus to EU integration and foreign policy coordination.  

Overall, not a very impressive list, but not a total disaster either, and hey - Bush will be gone!

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Dec 30th, 2007 at 10:33:10 PM EST
Yes, this is a DKos diary.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 07:25:04 AM EST
[ Parent ]
in 2008.

Well, the UK (or rather: London) will suffer from the bursting bubble. But otherwise, nothing much will be notable, including a lot fewer bad news than elsewhere.

As noted above, I see Kosovo as a major crisis,and the EU will only come out decently of that particular crisis if it moves away from the US line, which I sadly don't see happening this year.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Dec 31st, 2007 at 07:51:59 AM EST
[ Parent ]
Sometimes there is something to be said for being boring - the Swiss have perfected the art (sorry Fran) - and in an era of crisis and turmoil it can be a positive virtue. It allows the political establishment to be less focused on crisis management and more focussed on planning to achieve long term goals.  It also gives people like us more of an opportunity to influence the agenda.

Maybe someone should do a diary on our wish lists for the new year...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Dec 31st, 2007 at 08:20:51 AM EST
[ Parent ]
I saw this morning that Cyprus and Malta will be joining the Euro zone.  And I imagine that the new border protocols in the East might have the significant impact of reorientating trade from East facing towards Russia, towards greater economic integration with Western Europe.    I'm sure the Eastern Europeans will appreciate all the factories being sent there from Spain.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Dec 31st, 2007 at 12:52:42 PM EST
[ Parent ]
What about Spain melting down, with millions on 50 yrs mortgages, payments at 45% disposable income for 3.5%, variable rate, now reseting at 5% ? And RE crashing like never before, the brits packing with the pound down 20% ?
Some say Italy will have to contemplate leaving the eurozone some day, but I think the next spanish prime minister will consider this as early as next year, when it's clear to him that the ECB will hold tight to please Gretchen von Weimar.

Pierre
by Pierre on Mon Dec 31st, 2007 at 01:43:57 PM EST
[ Parent ]
I'd like to understand more about this, especially as you say it hits this year.  i have little understanding of the Spanish economy, but what you say is serious on the surface.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin
by Crazy Horse on Mon Dec 31st, 2007 at 02:35:46 PM EST
[ Parent ]
Pierre:
Some say Italy will have to contemplate leaving the eurozone some day, but I think the next spanish prime minister will consider this as early as next year, when it's clear to him that the ECB will hold tight to please Gretchen von Weimar.
It is likely that the next PM will be again Zapatero, only this time Solbes will be running for a seat in Parliament. Given that Solbes' economic policy has been implemented in Spain since 1993 with Rato deviating very little from it in 1996-2004, can we ask for Solbes' head when the bottom falls out?

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 02:45:20 PM EST
[ Parent ]
CA is already hurting - an earthquake, I shudder to think of it. It would be catastrophic. Even something on the level of 1989 would be much more damaging today given the precariousness and underfunding of the basic safety net.

I completely and wholeheartedly agree with the "shout louder" prescription you give. We at Calitics are attempting to do exactly that - to push progressive ideas into the California mainstream. I had an op-ed in the LA Times a few weeks back about the need to focus on our structural revenue problem instead of treating the budget crisis as a spending problem. My assemblyman had something similar published around the same time, and although it's not nearly enough to change the tenor of the conversation, it's a start...

And the world will live as one

by Montereyan (robert at calitics dot com) on Sun Dec 30th, 2007 at 10:47:36 PM EST
Massive plans to support renewable energies seem like a no-brainer to me (but then I work in the industry, so I'm naturally biased) - they create a lot more jobs (many of them non-offshorable by nature: wind farms can only be serviced locally), and these a good quality jobs in manufacturing and local construction and high-tech maintenance services

In a recent column Thomas Friedman wrote:

Mr. [Van] Jones [who heads the Ella Baker Center for Human Rights in Oakland] has been on a crusade to help underprivileged African-Americans and other disadvantaged communities understand why they would be the biggest beneficiaries of a greener America. ...

"So we are going to have to put people to work in this country -- weatherizing millions of buildings, putting up solar panels, constructing wind farms. Those green-collar jobs can provide a pathway out of poverty for someone who has not gone to college."

<...>

"If we can get these youth in on the ground floor of the solar industry now, where they can be installers today, they'll become managers in five years and owners in 10. And then they become inventors," said Mr. Jones.

I especially hope the last paragraph is true.

Truth unfolds in time through a communal process.

by marco on Mon Dec 31st, 2007 at 12:43:28 AM EST
What Van Jones is doing could well become a model for implementing one aspect of the transition to a sustainable economy.  In reviewing Jerome's diary, i'm struck by the power of the obvious solution to so many of the underlying crises:  a vast ratcheting up of the renewable energy industry globally.  The main effect would in essence be the building of a much more solid foundation to the global economy.

The rise in demand for windpower globally has already caused supply to fall short, from issues like the growing scarcity of raw materials, the lead time and investment necessary for an increase in production capacity, and the related inability to ramp up the component supply chain.  Coupled with the continuing distortion of pricing in the energy markets, and the lack of value given to externalities (think carbon, energy security, increased health care costs), windpower's amazing growth rates do not begin to approach what could be achieved under a coherent global effort.

The impressive rational economic arguments for a "New Deal/Apollo" program in renewables have been around since the mid-70's.  The difference now is that the technologies have been proven, the ability to overcome engineering problems documented for decades as the technology matured, and the ability to ramp up the supply chain even against a lack of coherent global investment (in national markets around the globe) has been achieved over and over.

While some of the main components continue to be produced by their European manufacturing headquarters, there are gearbox and blade facilities in Eastern Europe, in China and India, in Brazil.  New facilities are online in what has finally become the world's largest single market, North America, and more are planned.  Korea is using plants formerly part of the shipbuilding industry to manufacture steel components like mainshafts for wind turbines, hoping to expand to global export.  All this manufacturing growth will continue for decades.

The local, decentralized nature of renewable energy is another foundation, as Jerome points out, by providing real jobs wherever projects are installed.  While windpower generally is constrained to windy regions, solar can be far more widespread.  Think of the available roof space in Los Angeles, for example.

It's a sad comment on our civilization that it's taken more than three decades to reach this point.  It's a fine comment on our civilization's potential to know that at least we've already reached the point where we can say, "Windpower has already shown it can grow quickly in many different markets around the globe, but with the political will of a global population aroused to action, the entire renewable future is but a step away."

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Dec 31st, 2007 at 05:04:03 AM EST
[ Parent ]
Yes, but there's no such thing as peak oil, global warming is a librul invention (everyone talked about ice ages in the 70s, but did one happen?) and it's abortion-doctor Al Qaeda immigrants who don't believe in evolution and want to take away our guns who are the real problem.

Crazy Horse:

The local, decentralized nature of renewable energy is another foundation, as Jerome points out, by providing real jobs wherever projects are installed.

The local, decentralised nature of renewables is exactly why corporations and the noise machine hate the idea so much.

A culture of successful small and medium-scale entrepreneurs will suck the life out of many of the corporate machines and the markets. (Private equity? Only if you're a hedge fund. Not so much if you're someone working on top of a ladder.)

It will also start gluing communities back together from their current state of pixelated alienation. And that's not a happy prospect either.

So, yes, it's a no-brainer, but I think this is one solution that either needs clear leadership from the top or an unprecedented groundswell of leverage from the bottom. It won't happen as long as the shiny pennies used to distract people ('terrism! 9/11!') are still part of the official narrative.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 31st, 2007 at 05:21:50 AM EST
[ Parent ]

The local, decentralised nature of renewables is exactly why corporations and the noise machine hate the idea so much.

Go tell GE, Siemens, EDF, E.On, Goldman Sachs or Morgan Stanley...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Dec 31st, 2007 at 05:28:09 AM EST
[ Parent ]
Are they supporting small-scale community-sized projects or Big Engineering?
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 31st, 2007 at 11:14:24 AM EST
[ Parent ]
ThatBritGuy:
A culture of successful small and medium-scale entrepreneurs will suck the life out of many of the corporate machines and the markets. (Private equity? Only if you're a hedge fund. Not so much if you're someone working on top of a ladder.)
Hey, a SME is "private equity".

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 07:23:34 AM EST
[ Parent ]
Yes, exactly. Community-sized projects can be built without funding by the markets, which means they can be built without being farmed by the markets.

This isn't an optional fact or a nice extra - it's essential to diversification and innovation.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 31st, 2007 at 11:17:15 AM EST
[ Parent ]
 Hi, Crazy Horse, have you heard of these: Vergnet aerogenerators?

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Mon Dec 31st, 2007 at 06:59:28 AM EST
[ Parent ]
Thanks for pointing out the Vergnet technology.  I'd heard of them, but hadn't done any review.  From the web site i see they've taken the course of evolution of the Carter wind turbines of the early 80's which evolved into the Carter Wind Eagle.  This turbine was thought by some top US designers to be the ultimate from a design standpoint, though it never proved itself in practice, mostly for business reasons.  Carter attempted to build a turbine that tried to mimic certain flexible trunk trees, with a center of gravity balance point allowing the turbine both pitch and yaw, i believe to replace a teetered hub.

Two-bladed, teetered hub machines have been around many decades.  The latest is the 1 MW Nordic Windpower turbine, which was developed over more than a decade in Sweden, and is now funded by Goldman Sachs.  Seems as if this would be the major competition for Vergnet.  I'll take a deeper look at the technology.

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Dec 31st, 2007 at 08:00:08 AM EST
[ Parent ]
I've heard they use the flexible rotor technology developed for the French helicopters.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Mon Dec 31st, 2007 at 09:09:03 AM EST
[ Parent ]
as their [China's] per capita emissions reach that of some European countries.
And we're not talking Moldova and Belarus here, but France, Sweden and Switzerland.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Dec 31st, 2007 at 04:01:46 AM EST
Huh. Those are the ones with lost of nuclear and/or hydro.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 07:21:54 AM EST
[ Parent ]
Gee, what a surprise.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Dec 31st, 2007 at 07:41:01 AM EST
[ Parent ]
I'll pick this out:

Massive plans to support renewable energies seem like a no-brainer to me (but then I work in the industry, so I'm naturally biased) - they create a lot more jobs (many of them non-offshorable by nature: wind farms can only be serviced locally), and these a good quality jobs in manufacturing and local construction and high-tech maintenance services; they help reduce carbon emissions and lower fuel imports and, most important, they are already cost-competitive. They can be the core plank of a massive New Deal/Apollo programme, if the political will were there.

This is a no-brainer. Seriously. Big industry and venture capital are already investing significant numbers. A public boost can change the scale of the effort and make it have a material impact on everything - the economy, the energy balance, climate change, local development, you name it.

There's important blog work here for us. We need to develop propositions based on this, get a positive side going to our policy discussions. What's more (see bruno-ken's comment above), it's global.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 31st, 2007 at 04:37:24 AM EST
The Year In Review And a Look Ahead for 2008 (Market Ticker - Karl Denninger)


  • The US will enter a recession, if it has not already done so. It will be consumer spending driven, with its genesis found in the Housing market. The slowdown will become evident once the "real" holiday sales data is posted, and accelerate into the first quarter.

  • Unemployment will increase significantly, rising to north of 5% by the middle of next year. This will of course cascade back into consumer default rates (mortgages, credit cards, auto loans, etc) and cause yet more layoffs. The "virtuous cycle" will turn vicious.

  • Housing will not turn in 2008. The total damage to prices will exceed a cumulative 15% from 2005-2008, and it will not be over. (...) The story in the housing space in '08 will be the defaults on "prime" mortgages - which in reality were nothing of the kind (e.g. "Option ARMs"), and on the piggyback seconds and HELOCs behind them.
    There is a serious risk of an all-out deflationary depression, and if we get one, it will almost certainly be the government's fault. Whoever wins the Presidency may wish they had lost come '09 and '10.

  • (...) The "big story" in the financial markets for 2008, and the likely trigger for major turmoil, will be the implosion of the CDS marketplace and how Buffett profited from it. This will stabilize the municipal bond marketplace which has been positively hammered.

  • Equity prices will be choppy in the first couple of months and will experience a peak to trough swing of at least 20% during the year in total. I expect the S&P 500 to at least touch 1220 in 2008 and my current downside target is 1070. (...)

  • Return OF capital will be far more important in 2008 than return ON capital.

  • I do not expect the central banks to "hyperinflate" anything. Metals, in a protracted, serious deflationary selloff will get smashed. (If you're a "Gold Bug", read below for why I think you're nutty to hold metals - there's a better play if you believe in hyperinflation.)

  • (...)

  • The Dollar will bounce all over before starting to take off when it becomes apparently that the rest of the world is going to get it worse than we will.


In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Dec 31st, 2007 at 05:26:07 AM EST
"The Dollar will bounce all over before starting to take off when it becomes apparent(ly) that the rest of the world is going to get it worse than we will."

???  What did that mean?

"Life shrinks or expands in proportion to one's courage." - Anaïs Nin

by Crazy Horse on Mon Dec 31st, 2007 at 05:46:15 AM EST
[ Parent ]
Some pundits prefer wishful thinking to reality?

I still don't understand why the dollar is as high as it is. The only explanation that I can think of (which doesn't rely on deliberate price-fixing) is that there's a kind of knee-jerk dollar flight - as returns become uncertain, there's a tendency to assume that the nominal reserve currency is the safest bet.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 31st, 2007 at 11:25:36 AM EST
[ Parent ]
I don't understand why the pound is as high as it is. Given the price of small-ticket items the pound should be worth much less.

We have met the enemy, and he is us — Pogo
by Migeru (migeru at eurotrib dot com) on Mon Dec 31st, 2007 at 11:28:02 AM EST
[ Parent ]
I'd guess it's a smaller version of the same phenomenon. When so much cash flows through the City, it's seen as a relatively safe haven.

It looks like this theory will be tested next year.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 31st, 2007 at 01:07:53 PM EST
[ Parent ]
... because there are so many dollars taken out of FX markets by neo-mercentalist deflation of value of their currency by China and others.

If they switched to targetting keeping their currency cheap against Euro's, then the dollar would fall further, and faster.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Dec 31st, 2007 at 06:15:25 PM EST
[ Parent ]
Not bad, and then leads up to this total non sequitur which appears to me to be at odds with what preceded it

The Dollar will bounce all over before starting to take off when it becomes apparently that the rest of the world is going to get it worse than we will.

How can the reset of the world possibly be in worse case than the US is about to be?

When the dollar loses its role as global reserve currency - and it is about to - then any thoughts of it "taking off" are about as wishful as it is possible to get.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Dec 31st, 2007 at 05:58:50 AM EST
[ Parent ]
is a good way to  describe this last sentence, indeed.

There's denial around for everybody, even those that are more aware of what's been going on...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Dec 31st, 2007 at 07:53:16 AM EST
[ Parent ]
To get my prediction in, the Dollar will pass 1.50 to the Euro, before oil reaches $100.
by nanne (zwaerdenmaecker@gmail.com) on Mon Dec 31st, 2007 at 08:10:00 AM EST
[ Parent ]
To get my prediction in, the Dollar will pass 1.50 to the Euro, before oil reaches $100.

by nanne (zwaerdenmaecker@gmail.com) on Mon Dec 31st, 2007 at 01:10:00 PM CET


Well, that one didn't last long...
by nanne (zwaerdenmaecker@gmail.com) on Wed Jan 2nd, 2008 at 05:33:09 PM EST
[ Parent ]
I think it might have been just political self preservation - if you're going to say a lot of bad things about the US you can escape the charge of lack of patriotism if you then claim everyone else is going to cop it even worse.  The one thing you can't say is that the US is losing its grip on world domination...that would be like admitting it is losing the war on terror or whatever the latest cover story for the attempt at world domination is.  The fate of the dollar is a proxy for the fate of the "New American Century" so how could you deny that biblical prophesy?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Dec 31st, 2007 at 09:13:45 AM EST
[ Parent ]
Quite probably it is political self preservation, yes.

The reaction of the US polity and Public to the end of dollar hegemony will be an interesting study as it becomes daily more apparent in the coming year.

I suspect that it was some time around mid (July/August?) 2007 that the US had a "Suez moment" when their fortune was read to them economically, probably by the Chinese whispering in Hank Paulson's ear.

The choice would have been either a managed decline or, should the US have continued their antics in Iraq and Iran, a catastrophe.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Dec 31st, 2007 at 09:54:49 AM EST
[ Parent ]
That point on Buffett is worth watching.

Imho we'll know the bottom is there when he starts buying.

Assuming of course he means Warren, and not Jimmy.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Dec 31st, 2007 at 02:33:16 PM EST
[ Parent ]
into the muni bond market, and the "monoline insurers" market. Should be interesting to watch indeed.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Dec 31st, 2007 at 08:43:55 PM EST
[ Parent ]
I have serious doubts that grandpa's hands are clean, so I should ask Jimmy what he's buying.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Wed Jan 9th, 2008 at 01:40:10 PM EST
[ Parent ]
Speaking of predictions, who got that champagne bottle?

I am pretty sure I did not...

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Jan 1st, 2008 at 09:05:16 AM EST
environmentalists who are, of course, the real cause of higher energy prices by preventing investment in resources at home.

I had to re-read that and wondered if an outsider wouldn´t get the wrong idea, or misquote you.

Also, would you explain what the windfarm service and maintenance jobs are, and why they must be local?

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Wed Jan 9th, 2008 at 01:51:46 PM EST


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