Meltdown

[Florestan]

Results:
Z has the same wealth
A won $40
B lost $60 =======> There's a loss of $20 somewhere in this Economy.

No, there is none. Look at it this way:

Time zero: Z has one IBM share, A has 60$, B has 100$
Time zero+1 (Z sells to A) : Z has 60$, A has one IBM share, B has 100$
Time zero+2 (IBM stock appreciates, A sells to B): Z has 60$, A has 100$, B has one IBM share
Time zero+3 (IBM stock depreciates, B sells to Z): Z has one IBM share + 20$, A has 100$, B has 40$

At each time, the total sum of the wealth is 160$ + one IBM share. Nothing is lost, as it should have been obvious from the very beginning. Money don't disappear, they just pass from one pocket to another. Just like mass or energy, money obey a law of conservation.

[Sean]

The two trillion dollars will never be paid- it's not real money and is only borrowed from the future stock market. By the time it has to be paid all the world's major financial institutions will have collapsed with the end of petroleum- that's the argument and the US policy.

[BachQ]

fr: Reuters





Oil hits record near $106 on dollar, OPEC, supply
Thu Mar 6, 2008 6:49am EST
By Ikuko Kao



LONDON (Reuters) - Oil hit a record high near $106 on Thursday as a weak dollar helped prices to extend the previous day's gains, which were prompted by a drop in U.S. oil inventories and OPEC's decision to keep output unchanged.  U.S. light crude for April delivery struck a new record of $105.96 a barrel and was trading $1.05 higher at $105.57 by 6:29 a.m. EST. 

"The crude squeeze continues. The sharp rise in crude was exacerbated by a weak U.S. dollar, OPEC's decision to stand still," Citigroup said in a research note.  The dollar fell to a record low against the Swiss franc and hit a fresh trough against the euro on Thursday.

[bwv 1080]

No, there is none. Look at it this way:

Time zero: Z has one IBM share, A has 60$, B has 100$
Time zero+1 (Z sells to A) : Z has 60$, A has one IBM share, B has 100$
Time zero+2 (IBM stock appreciates, A sells to B): Z has 60$, A has 100$, B has one IBM share
Time zero+3 (IBM stock depreciates, B sells to Z): Z has one IBM share + 20$, A has 100$, B has 40$

At each time, the total sum of the wealth is 160$ + one IBM share. Nothing is lost, as it should have been obvious from the very beginning. Money don't disappear, they just pass from one pocket to another. Just like mass or energy, money obey a law of conservation.

not quite.  what you have demonstrated is that the simple trading example is a zero sum game (as all stock trading is relative to the return of the market).  If IBM had say paid a $2 dividend at each point in time then it would be a positive sum game.  On the other hand IBM could go bankrupt after Z bought it back.

money is created all the time by fractional reserve banking and destroyed by various sorts of business failures

[head-case]

not quite.  what you have demonstrated is that the simple trading example is a zero sum game (as all stock trading is relative to the return of the market).  If IBM had say paid a $2 dividend at each point in time then it would be a positive sum game.  On the other hand IBM could go bankrupt after Z bought it back.

money is created all the time by fractional reserve banking and destroyed by various sorts of business failures

Of course, if IBM price fluctuates due to speculation while its business is operating fine, there is no problem.  If IBM tanks because their sales are off then there is a problem, but the falling stock price is the symptom, not the cause.  The problems of a falling share price are indirect, such as IBM can't raise cash as easily by issuing more stock (the private sector version of printing more money).

[johnQpublic]

Two Days Ago: Price of oil reaches all-time high

Crap

Yesterday: Price of oil reaches all-time high

Double crap

Today: Price of oil reaches all-time high

Triple Crap!!!

[BachQ]

NEW YORK TIMES
March 6, 2008
The Energy Challenge
Turning Glare Into Watts
By MATTHEW L. WALD
BOULDER CITY, Nev. — At first, as he adjusted pumps and checked temperatures, Aaron Boucher looked like any technician in the control room of an electrical plant. Then he rushed to the window and scanned the sky, to check his fuel supply.

Mr. Boucher was battling clouds, timing the operations of his power plant to get the most out of patchy sunshine. It is a skill that may soon be in greater demand, for the world appears to be on the verge of a boom in a little-known but promising type of solar power.

It is not the kind that features shiny panels bolted to the roofs of houses. This type involves covering acres of desert with mirrors that focus intense sunlight on a fluid, heating it enough to make steam. The steam turns a turbine and generates electricity.

The technology is not new, but it is suddenly in high demand. As prices rise for fossil fuels and worries grow about their contribution to global warming, solar thermal plants are being viewed as a renewable power source with huge potential.

After a decade of no activity, two prototype solar thermal plants were recently opened in the United States, with a capacity that could power several big hotels, neon included, on the Las Vegas Strip, about 20 miles north of here. Another 10 power plants are in advanced planning in California, Arizona and Nevada.

On sunny afternoons, those 10 plants would produce as much electricity as three nuclear reactors, but they can be built in as little as two years, compared with a decade or longer for a nuclear plant. Some of the new plants will feature systems that allow them to store heat and generate electricity for hours after sunset.

Aside from the ones in the United States, eight plants are under construction in Spain, Algeria and Morocco. Another nine projects are in various stages of planning in those countries as well as Israel, Mexico, China, South Africa and Egypt, according to a count kept by Frederick H. Morse, formerly in charge of solar energy at the Energy Department and now a consultant.

Mr. Morse and others say that solar thermal plants could meet most of the galloping growth in power demand in Phoenix, Las Vegas and the rest of the southwestern United States. In fact, experts say enough sunshine hits the deserts of the Southwest that such plants could theoretically power the entire United States. But that is a far-off dream, since it would require big new transmission cables.

The workability of solar thermal power was established in the 1980s, when developers in California built a series of plants in the Mojave Desert, eventually reaching 354 megawatts of capacity. A megawatt is enough electricity to run 1,000 room air-conditioners at once.

The California plants grew more sophisticated and costs shrank as the project progressed. But then the price of a competing fuel, natural gas, collapsed in the 1990s and building new solar plants became uneconomic.

Today, natural gas prices are much higher, and political opposition is rising to construction of new coal-burning power plants. Many states, including California, are imposing mandates for renewable energy. All of that is reviving interest in solar thermal plants.

The power they produce is still relatively expensive. Industry experts say the plant here produces power at a cost per kilowatt- hour of 15 to 20 cents. With a little more experience and some economies of scale, that could fall to about 10 cents, according to a recent report by Emerging Energy Research, a consulting firm in Cambridge, Mass. Newly built coal-fired plants are expected to produce power at about 7 cents per kilowatt-hour or more if carbon is taxed.

The solar plants receive a federal tax subsidy, like other types of renewable energy, which makes the economics work for builders but also feeds skepticism about the technology's long-term potential. "Unless there's a subsidy involved, it doesn't seem like a very attractive technology," said Revis James, a renewables expert at the Electric Power Research Institute, a utility industry consortium.

Still, solar plants do tend to produce peak power during the hottest part of the day, when demand is highest and electricity is costly, so at certain times they are already competitive with plants using natural gas. And they have an advantage over the other widely available form of renewable power, wind turbines: they are more predictable.

With California utilities struggling to meet a state quota of 20 percent renewable power by 2010, the state has grown interested in solar plants. Pacific Gas and Electric has committed to building several plants and is expected to make announcements about new solar plants soon.

In Phoenix on Feb. 21, the Arizona Public Service unit of Pinnacle West announced plans for a large plant to be built by a Spanish company, Abengoa, and finished in 2011. That one will store heat so that it can continue to produce power for up to six hours after sunset.

Donald E. Brandt, the chief executive of Pinnacle West, said the decision to build the new solar plant was as important as his company's decision in 1973 to build the Palo Verde nuclear plant, the largest and most modern in the United States.

"The key is, the solar technology has advanced," Mr. Brandt said. At 280 megawatts, "it's a critical size; it's a real power plant; it's meaningful; it's beyond the demonstration stage."

Companies that build the plants have been working on improving the technology, raising efficiency and lowering costs. A battle among competing approaches is expected over the next few years.

The plant here, Nevada Solar One, built by a Spanish company, Acciona, is of a proven design. It uses a mirror in the shape of a parabola to focus light onto a black pipe with a heat-transfer fluid inside. The fluid is used to boil water into steam, which turns a generator that can produce 64 megawatts.

That is small compared with a plant running on coal or natural gas, but far bigger than a typical installation involving solar photovoltaic panels, the type of solar power most people are familiar with. That technology, while good for some uses, is far more expensive than solar thermal power.

Suppliers of thermal systems are gearing up for a boom. In Las Vegas, a company called Ausra is building a factory to make mirrors for one type of solar plant; it will double the world's manufacturing capacity. A German company, Schott, is building a factory in Albuquerque that will make heat-collecting tubes.

The newest solar-thermal technology involves building a "power tower," a tall structure flanked by thousands of mirrors, each of which pivots to focus light on the tower, heating fluid. That design can work even in places with weaker sunlight than a desert.

One of the big advantages of these plants is that they can be built with the capacity to store heat in what amounts to a giant Thermos. Experts say that will smooth production and make it easier to integrate the plants into the electrical grid.

If large numbers of plants are built, they will eventually pose some problems, even in the desert. They could take up immense amounts of land and damage the environment. Already, building a plant in California requires hiring a licensed tortoise wrangler to capture and relocate endangered desert tortoises.

"The one thing that's eventually going to raise its head is desert biodiversity, and the land area itself," said Terrence J. Collins, an environmental expert and professor at Carnegie Mellon University.

Building the plants in deserts poses another obvious problem: deserts are not exactly teeming with power lines. "Whatever you do, you've got to have the wiring," Mr. Collins said.

Despite the difficulties, solar thermal plants have an other-worldly beauty as they run.

At Nevada Solar One the other day, Mr. Boucher, 30, ran the computerized control room. Dressed in a T-shirt, sneakers and a Boston Red Sox cap worn backwards, he looked a bit like a teenage gamer as he used a computer mouse to manipulate the plant.

He was trying to produce as much electricity as possible while saving heat to tide the plant over as clouds cast episodic shadows on the solar array. "I've been fighting it all day," he said.

Outside, row after row of U-shaped mirrors, covering nearly a square mile, stretched across the desert. In the center of each U, where the force of the sun was magnified 70 times, ran a pipe painted black, and inside it flowed oil that warmed to hundreds of degrees as it collected the heat needed to run a generator.

The buzz in the control room, as Mr. Boucher worked, contrasted with the sanguine scene beyond the windows. Imperceptibly, in the dusty wind of the high desert, 182,000 mirrors moved from east to west, tracking the sun across the sky.

[bwv 1080]

Of course, if IBM price fluctuates due to speculation while its business is operating fine, there is no problem.  If IBM tanks because their sales are off then there is a problem, but the falling stock price is the symptom, not the cause.  The problems of a falling share price are indirect, such as IBM can't raise cash as easily by issuing more stock (the private sector version of printing more money).

But that begs the question, what you are calling speculation is simply the market trying to estimate the present value of IBM's earnings, incorporating known information about the company - its sales, management quality etc.  Whatever the stock price, diluting current investors by issuing new shares will lower the price.

[bwv 1080]

You can download the book here:
http://www.oilendgame.com/ReadTheBook.html

I just ordered a hard copy


...
In the book's powerful summary conclusion, Dr. Amory Lovins, president of the Rocky
Mountain Institute and the report's principal author, argues persuasively that by 2035 we
can be entirely independent of imported oil and that "it will cost less to displace all of the
oil that the United States now uses than it will cost to buy that oil." Specifically, he
continues, "by 2025, the annual economic benefit of displacing all of our current oil
imports would be $130 billion gross (or $70 billion net of the displacement's cost). To
achieve this does not require a revolution, but merely consolidating and accelerating trends
already in place."
But 2035 is not, of course, tomorrow. In order to improve our immediate energy security,
we must diversify our sources of hydrocarbons away from the Middle East. Even a cursory
survey of alternative sources of natural gas leads one to consider Russia.
First, a few facts. Today, measured in barrels of oil equivalent, Russia is the largest
producer of energy in the world. It also has more natural gas than any other country in the
world -- roughly 1,700 trillion cubic feet (proven recoverable). This gas is heavily
concentrated on the North coast of Russia on the Yamal peninsula. And it is stranded. That
is, there are no pipelines to get it to the market. These circumstances, however, make it an
ideal site to anchor several so-called trains to produce liquefied natural gas (LNG) for ship
transport to North America.
Today, independent companies are producing gas in the Yamal peninsula for less than $1
per thousand cubic feet (mcf) and there is solid evidence that it could be liquefied, shipped
and delivered to North America for at least one-third less than the current price of over
$6/mcf.
Some will say -- in the wake of the Yukos affair -- that the risk of politically motivated
interference in Russia is too great for investments of the scale required. It takes little
thought, however, to distinguish between an isolated confrontation driven by personal
differences -- as the Yukos affair is -- and one driven by the huge Russian strategic interest
in penetrating the U.S. gas market.
In sum, it is entirely in American and Russian interest to encourage and facilitate a
growing trade in LNG. Especially when one considers the alternative of remaining reliant
on oil and gas from the Persian Gulf.
Among the serious problems facing the new administration surely the long-term threat to
our economy of $45/bbl oil and $6/mcf natural gas must be near the top. This threat is
accentuated by the threat of disruption of deliveries from the Persian Gulf. It is becoming
clear, however, that the means to achieving near-term energy security and ultimate
independence from foreign oil are at hand. Courage and leadership are all that it takes to
get us there.
Mr. McFarlane served as President Reagan's national security adviser and now chairs
an energy and environmental development firm in Washington.

[m_gigena]

No, there is none. Look at it this way:

Time zero: Z has one IBM share, A has 60$, B has 100$
Time zero+1 (Z sells to A) : Z has 60$, A has one IBM share, B has 100$
Time zero+2 (IBM stock appreciates, A sells to B): Z has 60$, A has 100$, B has one IBM share
Time zero+3 (IBM stock depreciates, B sells to Z): Z has one IBM share + 20$, A has 100$, B has 40$

At each time, the total sum of the wealth is 160$ + one IBM share. Nothing is lost, as it should have been obvious from the very beginning. Money don't disappear, they just pass from one pocket to another. Just like mass or energy, money obey a law of conservation.

Just like Head-case, you don't get it. It's not just about money (cash, coins, bank deposits), I'm speaking about VALUE.


Time zero: Z has one IBM share (WHICH IS WORTH $60), A has 60$, B has 100$
Time zero+1 (Z sells to A) : Z has 60$, A has one IBM share, B has 100$ ==> JUST A TRANSFERENCE

Time zero+2a (IBM stock appreciates): Z has 60$, A has one IBM share WHICH NOW IS WORTH $100, for whatever price adjustment, B has 100$

Time zero+2b (A sells to B): Z has 60$, A has 100$, B has one IBM share WORTH 100

Time zero+3a (IBM stock depreciates): Z has 60$, A has 100$, B has one IBM share NOW WORTH $40

Time zero+3b (B sells to Z): Z has one IBM share WORTH $40 + 20$*, A has 100$, B has 40$

*Z's net worth is always $60, it doesn't matter if he now has $20 and the same share, because it's the same as before. Wanna know why? Because the first one had a value of $60, and this new one is accepted at the market at $40.

not quite.  what you have demonstrated is that the simple trading example is a zero sum game (as all stock trading is relative to the return of the market).

Transactions, yes. But within them value fluctuates, and so does people wealth and, when aggregated, the net worth of the whole Economic framework. This is what Florestan and Head-case don't seem to understand.

money is created all the time by fractional reserve banking and destroyed by various sorts of business failures

[head-case]

I understood you the first, second and third time.  Your definition of value is simply irrelevant if the item in question has any intrinsic worth.   If that share of IBM is still paying its dividend it is no better or worse than it was before the price fluctuation.  After black Monday, when the US stock market lost one third of its value in one day, nothing happened.  The people who sold the day before were happy, the people who bought the day before were unhappy, and the economy went forward exactly as before (after the federal reserve took some measures to make sure that liquidity was maintained and that the financial markets didn't seize up).

Just like Head-case, you don't get it. It's not just about money (cash, coins, bank deposits), I'm speaking about VALUE.


Time zero: Z has one IBM share (WHICH IS WORTH $60), A has 60$, B has 100$
Time zero+1 (Z sells to A) : Z has 60$, A has one IBM share, B has 100$ ==> JUST A TRANSFERENCE

Time zero+2a (IBM stock appreciates): Z has 60$, A has one IBM share WHICH NOW IS WORTH $100, for whatever price adjustment, B has 100$

Time zero+2b (A sells to B): Z has 60$, A has 100$, B has one IBM share WORTH 100

Time zero+3a (IBM stock depreciates): Z has 60$, A has 100$, B has one IBM share NOW WORTH $40

Time zero+3b (B sells to Z): Z has one IBM share WORTH $40 + 20$*, A has 100$, B has 40$

*Z's net worth is always $60, it doesn't matter if he now has $20 and the same share, because it's the same as before. Wanna know why? Because the first one had a value of $60, and this new one is accepted at the market at $40.

Transactions, yes. But within them value fluctuates, and so does people wealth and, when aggregated, the net worth of the whole Economic framework. This is what Florestan and Head-case don't seem to understand.

[orbital]

Stock market is not a zero-sum game (precisely because there is the added value of dividends and there is an entity behind the stock). However, also note that in the long run there are always a disproportional number of investors who lose money to those who make money. Thus, the added wealth (by dividends or secondary offerings or whatever) is distributed among less and less people.

Just imagine a pool of 16 investors with $100 each who all have a 50% chance of making or losing $50 on every trade. At the end of 4 trades, there will be only 5 investors who will have made money, 5 investors who are square, and 6 that have lost their initial investment.

A big crash on the stock market may not have a big effect on wealth lost or made in aggregate, but more number of people will have lost their money compared to those who made money, and this creates a hurdle on economic activity if sustained losses in market continue.

[bwv 1080]

Stock market is not a zero-sum game (precisely because there is the added value of dividends and there is an entity behind the stock).

My point was that relative to the return of the broad market, trading individual stocks is a zero-sum game because the average dollar gets the market return.  Actually when you factor in costs, trading stocks is a negative sum game

However, also note that in the long run there are always a disproportional number of investors who lose money to those who make money. Thus, the added wealth (by dividends or secondary offerings or whatever) is distributed among less and less people.

Not if there is no persistance in winners.   Wealth would revert to the mean, or the market return.

A big crash on the stock market may not have a big effect on wealth lost or made in aggregate, but more number of people will have lost their money compared to those who made money, and this creates a hurdle on economic activity if sustained losses in market continue.

Again it begs the question on why the market crashed - whether or not it reflects some change in underlying economic condititons

[paulb]

A big crash on the stock market 

alot of people have lost money, = their accts are less after the Sept crash.
and the losses continue.
basically whats going on now is athe prelude of things to come.
IOW the market is screwed.

Iraq war expense
deficits in trade
oil up
unemployment up
real estate market crash
natural disaster expenses

You can not find anything, not one, nothing, zero positive concerning the US economy/which ultimately influences how the market goes.

A crash is inevitable.

People are losing money in the stock exchange and this triggers more pull back.

[BachQ]

Iraq war expense
deficits in trade
oil up
unemployment up
real estate market crash
natural disaster expenses

You mention the real estate bubble, but you fail to mention the credit bubble ......... As such, we're currently faced with twin bubbles (housing bubble + credit bubble) ....... And you know the old saying: "a double bubble means double trouble" .......... 

[bwv 1080]

How about the doom bubble?

[BachQ]

"it's clear our economy has slowed"



$100 oil hurts, just like a recession
Economists, once so dismissive of pricey crude's economic impact, say it's going to hurt.
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: March 7, 2008: 3:38 PM EST
NEW YORK (CNNMoney.com) -- Five months ago many economists said high oil prices wouldn't hurt the economy - now they're choking on their words.




Back in October, when oil prices were near $90 a barrel and the economy was still humming along economists said high oil prices shouldn't cut into economic growth. The economy used oil more efficiently than it did in the 1970s, and spending on gas was just a small percent of people's budget, the experts said.

Fast forward to March and you've got a sputtering economy, and economists saying $105 oil deserves a big part of the blame.

Even the White House is beginning to sound more pessimistic, predicting Friday that the the economy could contract.

"You have a very significant restraint on consumer spending," said Chris Lafakis, an associate economist at Moody's Economy.com, an economic consultancy. "It acts as a tax would."

Lafakis said consumers spend an extra $5 billion each year for each $1 increase in the price of crude.

When economists were predicting that oil wouldn't negatively impact the economy, they based their assertion on a price of about $80 a barrel.

But if oil stays at $100 a barrel for the next 12 months, consumers will have shelled out an extra $100 billion on oil by next year. That's an extra $100 billion not being spent at the mall, mega-mart or multiplex.

"The entire stimulus package could be drained by higher energy costs," Lafakis said, referring to the $120 billion lawmakers will refund to taxpayers in an effort to keep the economy out of recession. "That has the potential to turn a mild recession into something more dark."

Worse to come

Of course, high oil prices are not the only thing weighing on consumer spending, which accounts for about two-thirds of all U.S. economic activity. Declining home values mean people can't access cash through a home equity loan or profit from higher sale prices. In addition, the economy is shedding jobs, and unemployed people tend to spend less money.

"On its own, $100 oil wouldn't pull the economy into recession," said Beth Ann Bovino, a senior economist at Standard and Poor's. "But given the other factors, it's just another shoe to drop."

Both Bovino and Lafakis have similar predictions for the economy - a mild recession lasting the first and second quarters of 2008, then a modest recovery beginning in the second half of this year.

However, if oil goes to $115 or $120 a barrel - certainly not an outlandish thought given that crude prices have nearly doubled over the last 12 months - then those bets may be off.

Bovino said $115 oil, along with worsening conditions in the credit and foreign investment market, could be enough to keep the economy in recession through the first part of 2009.

"It would sure give the pessimistic forecast more credibility," she said. 

[paulb]

150/barrel
depends on what al qaeda wants to do. and the chavez/ahmahdinejad collilition.
that would put gas at near $5/gal
its inevitable, a  matter of when.
Bush looks very worried.
He will go down as the president who took up great torch of spending and ran like few before him.  2 wars at 40+ billion/month.
Obama will take that torch and outrun Bush like a  hare outruns a  tortoise, utilizing the old theory of spending ones way out a  recession.

the $ will fall further in true value.
if OPEC begins to ask for payment in Euros or in Gold, the $ has *had it*.

[BachQ]

Bush looks very worried.
He will go down as the president who took up great torch of spending and ran like few before him.  2 wars at 40+ billion/month.

Bush will go down in history as the "Bubble President"





Internet Bubble - Burst
Housing Bubble - Burst
Credit Bubble - Burst
Dollar Bubble - In process of bursting
Stock market Bubble - To be determined
Import Bubble - In process
Deficit Bubble - To be determined
War (Iraq) Bubble - To be determined
China Bubble - To be determined

[paulb]

I learned the other day Georgie was  a *poor little rich boy*, silver spoon, , C student, escaped the Viet war, given the texas governorship based on old texas name, etc etc.
So spending 40 billiona   month on a  war is just what a  early baby boomer needs to satisfy his ego.
He is cut off from the american's public true wish, which is to get out both wars and stay out wars.
I forsee some sort of protest against washingtons spending habits.

I was never for spending billions on the gulf coast for Katrina disaster.

Each state must be held accountable for its own problems.

Washington has over stepped its boundaries.

But as the american public is unaware of these issues, washington is free to do as she pleases with no conflicts.