Meltdown

[Archaic Torso of Apollo]

According to MINXIN PEI, who was originally from China ...

Think Again: Asia's Rise

Don't believe the hype about the decline of America and the dawn of a new Asian age. It will be many decades before China, India, and the rest of the region take over the world, if they ever do. [yadda yadda yadda, etc.]

I've been hearing about the coming "Pacific Century" since the 1980s. It's still not here, although Asia has indeed gotten more important. But that's only natural, and the idea of Chinese or Indian "world takeover" has never made sense to me.

Remember the years around 1990? The conventional wisdom was that 1) Japan's economy would continue to expand until it bumped the US from 1st position, thereby facilitating a Japanese economic takeover of the world (or at least Asia); 2) the re-unified Germany would become a hegemonic force within Europe, able to push that continent around at will. Neither scenario happened.

[Coopmv]

I've been hearing about the coming "Pacific Century" since the 1980s. It's still not here, although Asia has indeed gotten more important. But that's only natural, and the idea of Chinese or Indian "world takeover" has never made sense to me.

Remember the years around 1990? The conventional wisdom was that 1) Japan's economy would continue to expand until it bumped the US from 1st position, thereby facilitating a Japanese economic takeover of the world (or at least Asia); 2) the re-unified Germany would become a hegemonic force within Europe, able to push that continent around at will. Neither scenario happened.

Spitvalve.   I remember this all too well, being old enough to understand economic and geopolitical issues back in the 1980's where the Soviet Union was in Afghanistan and Japan was flying skyhigh economically.  Then there was no end in sight to the Japanese trade surplus with the US and they bought Rockefeller Center and other prized US properties.  Japan was supposed to be the dominant economic power in the 1990's and beyond and that did not happen.  Now the same prognosticators are singing unwarranted praises on China.  As these two articles rightly point out, the malaise the US finds itself in now is caused by having to fight two wars and to get itself out of the longest recession since the 1930, all simultaneously.  These shallow articles never did any in-depth analyses on the systemic corruption and deep-seated problems China has, which that country has been papering over since that is easy for a dictatorial regime to do (remember how effective the Soviet Union was in this game).  The deck of cards will come tumbling down at some point.  It is just a matter of when and what event would trigger the collapse ...

[BachQ]

As to the ongoing debate of inflation vs. deflation as the destiny of the US and other Western economies, here's another economist to add to the "deflation" camp.



Mike Whitney: The Deflating Economy



... Regrettably, when the stimulus runs out, the economy will slide back into negative territory. That's because the US consumer has crossed an important threshold and no longer has the ability to drive the economy through debt-fueled consumption. The data indicates a critical change in consumer behavior which portends a shift away from the current model for economic growth. It's a whole new ballgame.  From the mid-1980s to 2007, the ratio of debt-to-GDP rocketed from 165% to to over 350%; more than doubling in that same period.

[--snip--]

U.S. household leverage, as measured by the ratio of debt to personal disposable income, increased modestly from 55% in 1960 to 65% by the mid-1980s. Then, over the next two decades, leverage proceeded to more than double, reaching an all-time high of 133% in 2007.

[--snip--]

The US consumer, long considered an inexhaustible resource, is tapped out. Without job security and access to easy credit; consumer spending will slow, prices will fall, demand will flag and the economy will tank. There won't be a recovery, because pre-crisis levels of consumption will not return; that much is certain. Sustainable growth requires higher wages and longer working hours; neither of which are likely anytime soon. The economy is headed for a protracted slowdown with persistent high unemployment and growing social unrest. The future is deflation.

---LINK---

[BachQ]

It doesn't take a rocket scientist to predict the inevitable plunge in tax revenues.



State Tax Revenues at Record Low, Rockefeller Institute Finds



The anemic economy decimated state tax collections during the first three months of the year, according to a report released Friday by the Rockefeller Institute of Government. The drop in revenues was the steepest in the 46 years that quarterly data has been available.

The blow to state coffers, which the report said appeared to worsen in the second quarter of the year, reflects the gravity of the recession and suggests the extent to which many states will probably have to resort to more spending cuts or tax increases to balance their budgets.

Over all, the report found that state tax collections dropped 11.7 percent in the first three months of 2009, compared with the same period last year. After adjusting for inflation, new changes in tax rates and other anomalies, the report found that tax revenues had declined in 47 of the 50 states in the quarter.   All the major sources of state tax revenue — sales taxes, personal income taxes and corporate income taxes — took serious blows, the report found.

–continued– (link) –

[Coopmv]

As to the ongoing debate of inflation vs. deflation as the destiny of the US and other Western economies, here's another economist to add to the "deflation" camp.



Mike Whitney: The Deflating Economy



... Regrettably, when the stimulus runs out, the economy will slide back into negative territory. That's because the US consumer has crossed an important threshold and no longer has the ability to drive the economy through debt-fueled consumption. The data indicates a critical change in consumer behavior which portends a shift away from the current model for economic growth. It's a whole new ballgame.  From the mid-1980s to 2007, the ratio of debt-to-GDP rocketed from 165% to to over 350%; more than doubling in that same period.

[--snip--]

U.S. household leverage, as measured by the ratio of debt to personal disposable income, increased modestly from 55% in 1960 to 65% by the mid-1980s. Then, over the next two decades, leverage proceeded to more than double, reaching an all-time high of 133% in 2007.

[--snip--]

The US consumer, long considered an inexhaustible resource, is tapped out. Without job security and access to easy credit; consumer spending will slow, prices will fall, demand will flag and the economy will tank. There won't be a recovery, because pre-crisis levels of consumption will not return; that much is certain. Sustainable growth requires higher wages and longer working hours; neither of which are likely anytime soon. The economy is headed for a protracted slowdown with persistent high unemployment and growing social unrest. The future is deflation.

---LINK---

The debt based economic model the US has been following for the past 25 years has been a disaster.  This same bankrupt model was also responsible for the relentless outsourcing of jobs, with manufacturing taking most of the brunt.  Right now, US consumers are all maxed out on their credit cards and the home equities have evaporated as well.  Now with the total lack of job security, I just do not see how the consumption driven economy will come back to life anytime soon ... 

[BachQ]

The debt based economic model the US has been following for the past 25 years has been a disaster.  This same bankrupt model was also responsible for the relentless outsourcing of jobs, with manufacturing taking most of the brunt.  Right now, US consumers are all maxed out on their credit cards and the home equities have evaporated as well. 

Coop, did you write this article (below)?  He goes off onto an anti-GoldmanSachs tangent, but otherwise this was written by YOU! 


Dr. Paul Craig Roberts -- What Economy?  There's nothing left!

The U.S. manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical "New Economy."

The "New Economy" was based on services. Its artificial life was fed by the Federal Reserve's artificially low interest rates, which produced a real estate bubble, and by "free market" financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans' wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can't borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America's consumer economy, approximately 70 percent of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the U.S. government's budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America's expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

The US government's budget is 50 percent in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street's financial gangsterism, the world needs its own money and hasn't $2 trillion annually to lend to Washington.

As dollars are printed, the growing supply adds to the pressure on the dollar's role as reserve currency. Already America's largest creditor, China, is admonishing Washington to protect China's investment in U.S. debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of U.S. dollars by acquiring gold and stocks of raw materials and energy.

–snip–

The worst of the economic crisis has not yet hit. I don't mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are diminishing the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.

The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government's bills and from the dollar's loss of exchange value. Suddenly Wal-Mart prices will look like Nieman Marcus prices.

Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.

– continued:  What Economy?  There's nothing left! —

[BachQ]

Telegraph: US lurching towards 'debt explosion' with long-term interest rates on course to double

The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country's ability to pay its debts and potentially plunging it into another recession, according to a study by the US's own central bank

The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a "debt explosion". Mr Laubach's study has implications for the UK, too, as public debt is soaring. A US crisis would have implications for the rest of the world, in any case.

*** The study is damning because Mr Laubach was the Fed's economist at the time, going on to become its senior economist between 2005 and 2008, when he stepped down. As a result, the doubling in rates is the US central bank's own prediction. Mr Congdon said the study illustrated the "horrifying" consequences for leading western economies of bailing out their banks and attempting to stimulate markets by cutting taxes and boosting public spending. He said the markets had failed to digest fully the scale of fiscal largesse and said "current gilt yields [public debt] are extraordinary low given the size of deficits".

Should the cost of raising or refinancing public debt in the markets double, "the debt could just explode", he said, adding that it would come to a head in "five to 10 years". 

[BachQ]

LONDON - Oil and gas drilling in British waters fell by more than half in the second quarter, business advisory group Deloitte said, arguing Britain must take urgent steps to avert a sharp decline in production.

[Coopmv]

Coop, did you write this article (below)?  He goes off onto an anti-GoldmanSachs tangent, but otherwise this was written by YOU! 


Dr. Paul Craig Roberts -- What Economy?  There's nothing left!

The U.S. manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical "New Economy."

The "New Economy" was based on services. Its artificial life was fed by the Federal Reserve's artificially low interest rates, which produced a real estate bubble, and by "free market" financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans' wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can't borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America's consumer economy, approximately 70 percent of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.

Meanwhile the U.S. government's budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America's expensive war of aggression in Afghanistan and initiated a new war in Pakistan.

There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.

The US government's budget is 50 percent in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street's financial gangsterism, the world needs its own money and hasn't $2 trillion annually to lend to Washington.

As dollars are printed, the growing supply adds to the pressure on the dollar's role as reserve currency. Already America's largest creditor, China, is admonishing Washington to protect China's investment in U.S. debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of U.S. dollars by acquiring gold and stocks of raw materials and energy.

–snip–

The worst of the economic crisis has not yet hit. I don't mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are diminishing the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.

The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government's bills and from the dollar's loss of exchange value. Suddenly Wal-Mart prices will look like Nieman Marcus prices.

Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.

– continued:  What Economy?  There's nothing left! —

Paul Craig Roberts was a solid Reaganite, but Ronald Reagan was very different from any of his successors.  Roberts is right, there has been a Goldman guy in every administration since Clinton.  Goldman would probably have been a goner too had it not been Hank Paulson, its former CEO, who was at the helm at the US treasury.  $12B of the AIG bailout fund was a transfer payment to Goldman.  Go figure.  Did Goldman have $12B of shareholder equity?   

[Coopmv]

Telegraph: US lurching towards 'debt explosion' with long-term interest rates on course to double

The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country's ability to pay its debts and potentially plunging it into another recession, according to a study by the US's own central bank

Both the US and UK have been doing so-called the quantitative easing, i.e. to keep the long-term interest rates from rising too fast.  Ordinarily, the Feds and the BOE can only control short-term interest rates.  However, by doing QE, the central banks just buy a lot of long-term bonds to drive up their prices and therefore take down their yields and since long-term corporate bonds and mortgages are all indexed off these long-term treasury bonds, i.e. the 10 and 30 year bonds, they can artificially keep the long rates down.  But this will require the central banks to keep printing money in order to purchase these long bonds in the open market.  This is a sure path to financial Armageddon ...

[Coopmv]

LONDON - Oil and gas drilling in British waters fell by more than half in the second quarter, business advisory group Deloitte said, arguing Britain must take urgent steps to avert a sharp decline in production.

Is there any area of North Sea in the British territorial water that has not already been explored?  I think the North Sea Oil reserve is running out.  The Norwegian side still has a number of years left.  But the Norwegians are also a lot more fiscally conservative and they are well prepared for the inevitability ...

[Coopmv]

LONDON - Oil and gas drilling in British waters fell by more than half in the second quarter, business advisory group Deloitte said, arguing Britain must take urgent steps to avert a sharp decline in production.

BTW, the Brits probably have not been net exporter of crude for sometimes already.

[Coopmv]

Jul 17, 2009, 4:27 p.m. EST
Mobius sees repeat crisis without derivative regulations

By Tom Bemis, MarketWatch

LONDON (MarketWatch) -- Mark Mobius, executive chairman of Franklin Templeton Investments, said Friday he fears the U.S. and other countries will fail to regulate derivatives properly, setting the stage for a repeat of current financial turmoil in a few years.

"I'm afraid that the political pressures on politicians in the U.S. and other countries will be so great that they will be unable to make the proper changes in regulations," Mobius said in an interview Friday at Franklin Templeton's London offices.

Derivatives, complicated financial agreements that derive their value from underlying commodity prices or interest rates, are at the heart of the current financial crisis, Mobius said.

"Derivatives can be a good thing, but if they're not properly regulated they can be very destructive," Mobius said. 'This will all come home to roost again,' he said.

[BachQ]

Spitvalve.   I remember this all too well, being old enough to understand economic and geopolitical issues back in the 1980's where the Soviet Union was in Afghanistan and Japan was flying skyhigh economically.  Then there was no end in sight to the Japanese trade surplus with the US and they bought Rockefeller Center and other prized US properties.  Japan was supposed to be the dominant economic power in the 1990's and beyond and that did not happen.  Now the same prognosticators are singing unwarranted praises on China.  As these two articles rightly point out, the malaise the US finds itself in now is caused by having to fight two wars and to get itself out of the longest recession since the 1930, all simultaneously.  These shallow articles never did any in-depth analyses on the systemic corruption and deep-seated problems China has, which that country has been papering over since that is easy for a dictatorial regime to do (remember how effective the Soviet Union was in this game).  The deck of cards will come tumbling down at some point.  It is just a matter of when and what event would trigger the collapse ...

Excerpt:



Poorly Made in China: An Insider's Account of the Tactics Behind China's Production Game provides fascinating and disturbing answers. Chinese manufacturers cut corners wherever they can, from product quality to factory equipment and maintenance. They unilaterally change product and packaging specifications to trim costs. They raise prices after the deal is signed, leaving the importer to absorb the added cost. They reproduce their customers' products for sale at higher margins in other markets. With support from government, bankers, and networks of fellow manufacturers, they conduct manufacturing and customer relations as a game, treating the other party as a patsy not a partner, playing for the short term of making an extra penny at the risk of product quality but also taking a long-term, multidimensional outlook that outflanks the hapless customer. ... lead paint in toys and melamine in baby milk formula are not surprises but predictable outcomes from a manufacturing culture that takes customers for granted and assumes no responsibility for its outputs.

[BachQ]

BTW, the Brits probably have not been net exporter of crude for sometimes already.

Coop, UK reached peak oil production in 1999, and, according to the IEA, became a net importer of oil in 2006 (UK became a net importer of natural gas around 2004).  Given the data above, it's highly unlikely that UK will ever be a net exporter of oil/gas again.

BTW, here's a freshly minted listing of countries that have reached peak oil.  Notice that over 60% of all countries are now past peak.  "Only 14 of the 54 oil producing nations in the world are still increasing their oil production. The era of cheap oil is definitively over, as shown below."

Country   Peak Prod.   2008 Prod.   % Off Peak   Peak Year
United States   11297   7337   -35%   1970
Venezuela   3754   2566   -32%   1970
Libya   3357   1846   -45%   1970
Other Middle East   79   33   -58%   1970
Kuwait   3339   2784   -17%   1972
Iran   6060   4325   -29%   1974
Indonesia   1685   1004   -41%   1977
Romania   313   99   -68%   1977
Trinidad & Tobago   230   149   -35%   1978
Iraq   3489   2423   -31%   1979
Brunei   261   175   -33%   1979
Tunisia   118   89   -25%   1980
Peru   196   120   -39%   1982
Cameroon   181   84   -54%   1985
Other Eur.ia   762   427   -44%   1986
Russian Federation   11484   9886   -14%   1987*
Egypt   941   722   -23%   1993
Other Asia Pacific   276   237   -14%   1993
India   774   766   -1%   1995*
Syria   596   398   -33%   1995
Gabon   365   235   -36%   1996
Argentina   890   682   -23%   1998
Colombia   838   618   -26%   1999
United Kingdom   2909   1544   -47%   1999
Rep. of Congo (Brazzaville)   266   249   -6%   1999*
Uzbekistan   191   111   -42%   1999
Australia   809   556   -31%   2000
Norway   3418   2455   -28%   2001
Oman   961   728   -24%   2001
Yemen   457   305   -33%   2002
Other S. & Cent. America   153   138   -10%   2003*
Mexico   3824   3157   -17%   2004
Malaysia   793   754   -5%   2004*
Vietnam   427   317   -26%   2004
Denmark   390   287   -26%   2004
Other Africa   75   54   -28%   2004*
Nigeria   2580   2170   -16%   2005*
Chad   173   127   -27%   2005*
Italy   127   108   -15%   2005*
Ecuador   545   514   -6%   2006*
Saudi Arabia   11114   10846   -2%   2005 / Growing
Canada   3320   3238   -2%   2007 / Growing
Algeria   2016   1993   -1%   2007 / Growing
Equatorial Guinea   368   361   -2%   2007 / Growing
China   3795   3795   -   Growing
United Arab Emirates   2980   2980   -   Growing
Brazil   1899   1899   -   Growing
Angola   1875   1875   -   Growing
Kazakhstan   1554   1554   -   Growing
Qatar   1378   1378   -   Growing
Azerbaijan   914   914   -   Growing
Sudan   480   480   -   Growing
Thailand   325   325   -   Growing
Turkmenistan   205   205   -   Growing
Peaked / Flat Countries Total   -   49597   -   60.6% of world oil production
Growing Countries Total   -   32223   -   39.4% of world oil production

"Only 14 out of 54 oil producing countries and regions in the world continue to increase production, while 30 are definitely past their production peak, and the remaining 10 appear to have flat or declining production. Put another way, peak oil is real in 61% of the oil producing world when weighted by production. Since 2008 capped a record run for oil prices, most countries and oil companies were trying all-out to increase production. While a handful of producers (think Iraq) might be limited by above-ground factors, the majority of producers simply couldn't do any better in 2008"

"The evidence of the demise of the cheap oil era has become insurmountable. In the face of the highest oil prices on record, the great majority of the world's oil producers were incapable of taking advantage and producing more oil. Many nations including the US saw their oil production peak decades ago - there simply is no turning the clock back. This list shows that we are relying on a small number of countries to keep providing cheap oil. We need to move faster to alternatives and greater energy efficiency, before the last fourteen peak as well."

Source: The Oil Drum

[Coopmv]

Excerpt:



Poorly Made in China: An Insider's Account of the Tactics Behind China's Production Game provides fascinating and disturbing answers. Chinese manufacturers cut corners wherever they can, from product quality to factory equipment and maintenance. They unilaterally change product and packaging specifications to trim costs. They raise prices after the deal is signed, leaving the importer to absorb the added cost. They reproduce their customers' products for sale at higher margins in other markets. With support from government, bankers, and networks of fellow manufacturers, they conduct manufacturing and customer relations as a game, treating the other party as a patsy not a partner, playing for the short term of making an extra penny at the risk of product quality but also taking a long-term, multidimensional outlook that outflanks the hapless customer. ... lead paint in toys and melamine in baby milk formula are not surprises but predictable outcomes from a manufacturing culture that takes customers for granted and assumes no responsibility for its outputs.

DM,  Thanks for the article ...   

You are I are the few who have seen through the trickeries of these Chinese manufacturers.  There are some idiots out there who will call us xenophobic and perhaps they would learn only after they have consumed or used some poisoned Chinese-made products.  I shun all Chinese-made products whenever I can.  Since I love classical music, I do have some pretty good audio equipments, which are all European, Japanese or North American made.  I do not buy any Chinese-made audio gears, even if they are labeled as European or American designs.  Brands like Creek, NAD, Rotel will not find any shelf space at my house.  I continue to enjoy my Revox and Thorens, which were made in Switzerland almost 30 years ago ...

[Coopmv]

Coop, UK reached peak oil production in 1999, and, according to the IEA, became a net importer of oil in 2006 (UK became a net importer of natural gas around 2004).  Given the data above, it's highly unlikely that UK will ever be a net exporter of oil/gas again.

BTW, here's a freshly minted listing of countries that have reached peak oil.  Notice that over 60% of all countries are now past peak.  "Only 14 of the 54 oil producing nations in the world are still increasing their oil production. The era of cheap oil is definitively over, as shown below."

Country   Peak Prod.   2008 Prod.   % Off Peak   Peak Year
United States   11297   7337   -35%   1970
Venezuela   3754   2566   -32%   1970
Libya   3357   1846   -45%   1970
Other Middle East   79   33   -58%   1970
Kuwait   3339   2784   -17%   1972
Iran   6060   4325   -29%   1974
Indonesia   1685   1004   -41%   1977
Romania   313   99   -68%   1977
Trinidad & Tobago   230   149   -35%   1978
Iraq   3489   2423   -31%   1979
Brunei   261   175   -33%   1979
Tunisia   118   89   -25%   1980
Peru   196   120   -39%   1982
Cameroon   181   84   -54%   1985
Other Eur.ia   762   427   -44%   1986
Russian Federation   11484   9886   -14%   1987*
Egypt   941   722   -23%   1993
Other Asia Pacific   276   237   -14%   1993
India   774   766   -1%   1995*
Syria   596   398   -33%   1995
Gabon   365   235   -36%   1996
Argentina   890   682   -23%   1998
Colombia   838   618   -26%   1999
United Kingdom   2909   1544   -47%   1999
Rep. of Congo (Brazzaville)   266   249   -6%   1999*
Uzbekistan   191   111   -42%   1999
Australia   809   556   -31%   2000
Norway   3418   2455   -28%   2001
Oman   961   728   -24%   2001
Yemen   457   305   -33%   2002
Other S. & Cent. America   153   138   -10%   2003*
Mexico   3824   3157   -17%   2004
Malaysia   793   754   -5%   2004*
Vietnam   427   317   -26%   2004
Denmark   390   287   -26%   2004
Other Africa   75   54   -28%   2004*
Nigeria   2580   2170   -16%   2005*
Chad   173   127   -27%   2005*
Italy   127   108   -15%   2005*
Ecuador   545   514   -6%   2006*
Saudi Arabia   11114   10846   -2%   2005 / Growing
Canada   3320   3238   -2%   2007 / Growing
Algeria   2016   1993   -1%   2007 / Growing
Equatorial Guinea   368   361   -2%   2007 / Growing
China   3795   3795   -   Growing
United Arab Emirates   2980   2980   -   Growing
Brazil   1899   1899   -   Growing
Angola   1875   1875   -   Growing
Kazakhstan   1554   1554   -   Growing
Qatar   1378   1378   -   Growing
Azerbaijan   914   914   -   Growing
Sudan   480   480   -   Growing
Thailand   325   325   -   Growing
Turkmenistan   205   205   -   Growing
Peaked / Flat Countries Total   -   49597   -   60.6% of world oil production
Growing Countries Total   -   32223   -   39.4% of world oil production

"Only 14 out of 54 oil producing countries and regions in the world continue to increase production, while 30 are definitely past their production peak, and the remaining 10 appear to have flat or declining production. Put another way, peak oil is real in 61% of the oil producing world when weighted by production. Since 2008 capped a record run for oil prices, most countries and oil companies were trying all-out to increase production. While a handful of producers (think Iraq) might be limited by above-ground factors, the majority of producers simply couldn't do any better in 2008"

"The evidence of the demise of the cheap oil era has become insurmountable. In the face of the highest oil prices on record, the great majority of the world's oil producers were incapable of taking advantage and producing more oil. Many nations including the US saw their oil production peak decades ago - there simply is no turning the clock back. This list shows that we are relying on a small number of countries to keep providing cheap oil. We need to move faster to alternatives and greater energy efficiency, before the last fourteen peak as well."

Source: The Oil Drum

I do wonder about the overall accuracy of this survey.  First, how can any surveyor find precise data for the Chinese petro output, which is no doubt some highly guarded secret for the communist regime?  Second, Iraqi petro output has been chronically below optimum since the late 70's when Saddam Hussein started the war with Iran.  It may be a bit premature to put Iraq in the having reached peak oil category ...

[Coopmv]

I for one did not think much of those earnings announcements.  The quality of those earnings was terrible - just more accounting gimmicks and onetime event such as the sale of 51% of SmithBarney by Citi to Morgan Stanley ...

Bank profits not as impressive as they seem
Banks turn in hefty profits, but industry still has big problems
By Stephen Bernard and Ieva M. Augstums, AP Business Writers
On Friday July 17, 2009, 11:15 pm EDT

NEW YORK (AP) -- The big banks are making big money again, but they won't be back to health as long as they have to deal with a recession and customers defaulting on mortgages and credit cards.

The impressive numbers included a $3 billion second-quarter profit announced Friday by Citigroup and $2.4 billion for Bank of America. They followed similarly robust earnings for Goldman Sachs and JPMorgan Chase.

That the banks managed to turn a profit at all is remarkable. Just 10 months ago, many of them looked to be on the verge of collapse. The stock market staged a huge rally this week, driven by the signs of health in banking.

But Bank of America CEO Ken Lewis had some sobering words during a conference call with Wall Street analysts after his company's results were released Friday: "Profitability in the second half of the year will be much tougher than the first half."

Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. earned profits this spring largely on investment banking and trading -- not traditional banking businesses, which still look shaky. Citi benefited from selling its majority stake in the Smith Barney brokerage.

Strip away those money-makers, and the banks have to rely on customers who are losing their jobs or earning less money. The banks will suffer as long as their customers do.

Bank of America, JPMorgan Chase and Citigroup Inc. all reported they lost more money on loans during the second quarter. Bank of America alone set aside $13.4 billion to cover loan losses. But the banks also saw signs that loan delinquencies were starting to stabilize.

Celent analyst Isabel Schauerte said Bank of America's earnings tell the story of the financial industry.

"B of A's results are the bellwether of where Main Street is headed. Measured by credit losses, a moderation of default rates is not in sight," Schauerte said. "For the investment banking business of B of A, in contrast, the worst days seem to have passed."

President Barack Obama's top economic adviser said the signs of improvement displayed by the banks would not have been possible without government infusions, guarantees and other programs provided by the government.

"There is no financial institution that would be reporting the kind of positive results that we have seen in the last quarter but for the extraordinary public support provided by the government," said Lawrence Summers, the director of the White House's National Economic Council.

The profits announced this week raise more questions about when banks will be able to repay their bailout money. Goldman Sachs and JPMorgan Chase have already repaid their loans. Others, like Bank of America and Citigroup, have not.

"Moving forward, companies that are solvent and performing should be held to the promise to repay the taxpayers with interest," said Rep. Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, which is convening a hearing next week on bailout oversight.

The banks that reported earnings this week cited similar trends:

-- Mortgages: Bank of America's second-quarter revenue was bolstered by a spike in mortgage refinancings as interest rates tumbled early in the quarter. But rates have been climbing lately, and analysts expect that surge in refinancings to taper off. And more people are defaulting on mortgages.

-- Credit cards: Credit card losses tend to track the unemployment rate, and banks are expected to keep losing money on credit cards as more people lose their jobs. JPMorgan Chase, Citi and Bank of America all have huge credit card operations.

-- Investment banking: By far the quickest recovery in the banking business has come in the investment banking sector, helping Goldman Sachs earn $2.7 billion in the second quarter. Some of the rebound has come from the big stock market rally this spring. Companies also did well because there's less competition since Lehman Brothers and Bear Stearns went under.

Analysts say that besides the problems with loans, bank earnings may suffer because the country has less of an appetite for debt.

-- Commercial real estate: While home foreclosures are increasing, the commercial real estate market is expected to keep causing loan losses for banks. Rising store and office vacancies are cutting into landlords' and developers' cash flow, and leading them to default on their mortgages.

[BachQ]

UK economy set for biggest fall since 1945

By Margareta Pagano, Business Editor
Sunday, 19 July 2009

The UK economy is forecast to shrink by 4.5 per cent in 2009 – the biggest fall in a single year since 1945. This gloomy prognosis comes from leading forecaster the Ernst & Young Item Club, the only one to use the Treasury's own forecasting model, and paints a materially tougher outlook than the consensus.

Peter Spencer, chief economic adviser to Item, said yesterday: "The economic patient has been in trauma, but thanks to the paramedics at the Treasury and the Bank of England who pumped billions of pounds worth of medicine into the economy, the patient has been stabilised for now. But it remains unclear how quick and complete recovery will be, and there is still a serious chance of a relapse."

(continued)  LINK

[BachQ]

I do wonder about the overall accuracy of this survey.  First, how can any surveyor find precise data for the Chinese petro output, which is no doubt some highly guarded secret for the communist regime?  Second, Iraqi petro output has been chronically below optimum since the late 70's when Saddam Hussein started the war with Iran.  It may be a bit premature to put Iraq in the having reached peak oil category ...

Yeah, Coop, several of these countries have unreliable data, so there is a correspondingly large margin for error.  But what's important is the big picture: an increasing number of countries have reached peak oil production (by any measure), and are heading for permanent, irreversible decline.  Meanwhile, Asia is once again beginning to ramp up its demand for oil, which will be provided by fewer and fewer exporters.  The main point of that data is to show that fewer and fewer countries are net exporters, and instead are becoming net importers of oil.

BTW, since it takes energy to extract oil, and since oil is becoming increasingly expensive to extract, what is ultimately important is the "net energy" extracted from the worlds' oil fields.



The net energy available from dwindling future oil reserves is about to dive off a cliff ... the economic effects of which are yet unknown.

Second, Iraqi petro output has been chronically below optimum since the late 70's when Saddam Hussein started the war with Iran.  It may be a bit premature to put Iraq in the having reached peak oil category ...

Agreed.  No one can assert with confidence when Iraq will peak ... too many unknowns.