N. Roubini touched on a topic I've been wary to bring up
Nouriel Roubini has a video posted on RGE Monitor via Bloomberg on a nearly hour long discussion regarding the genesis of where we are vs. where we may end up.
In the the last 10 minutes or so, during a Q & A session he was discussing with the audience some pretty sobering issues and relating them to what was occurring just prior to WWII.
Now, I'm not suggesting a political firestorm for Tim E's Blog here, but I've been thinking long and hard about this for months. Nouriel was suggesting the relationships of currency problems and social instabilities that led to war at that time.
In my mind, way, way back there, i've always thought about the idea that some powers that be are trying to cripple us economically.
Here is the video: (the last 10 minutes is what really got my attention; about 50 minutes total. The first 2/3rd's is the same stuff we've hear from Nouriel Roubini before. )
http://www.bloomberg.com/avp/avp.htm?N= ... JFMJgA.asf
In the the last 10 minutes or so, during a Q & A session he was discussing with the audience some pretty sobering issues and relating them to what was occurring just prior to WWII.
Now, I'm not suggesting a political firestorm for Tim E's Blog here, but I've been thinking long and hard about this for months. Nouriel was suggesting the relationships of currency problems and social instabilities that led to war at that time.
In my mind, way, way back there, i've always thought about the idea that some powers that be are trying to cripple us economically.
Here is the video: (the last 10 minutes is what really got my attention; about 50 minutes total. The first 2/3rd's is the same stuff we've hear from Nouriel Roubini before. )
http://www.bloomberg.com/avp/avp.htm?N= ... JFMJgA.asf
Comments
I don't buy into the conspiracy theories suggesting there are evil people plotting in dark rooms to destroy the world's wealth, or undermine America. This global economic contraction was caused by too many players, and factors, over decades. NO ONE is getting rich off of this.
That said, I agree that we will likely see a MAJOR war in our lifetimes that will make Iraq look like a walk in the park. Wars usually come at the tail end of recessions or depressions, and the size of those wars is usually related to the size of the economic contraction.
The good news is that we are just now beginning to enter a depression which will last a LONG time. Using the first Great Depression as a comparison, I would say we are in mid-1930 right now. The US didn't enter World War II until 1941.
Again, I don't think the next big war will be caused by devious plots, but rather by the simple fact that nations under tremendous economic and social stress are far more prone to lash out at one another. When people are suffering they become fearful, which makes international relations far more volatile.
Yes, this is what I think Roubini was implying and I think you state this much better than I did. I do think the oil producing countries are not pleased with oil at their current prices. Equities getting hammered coupled with oil prices under pressure could really push oil producing countries into the instability we speak of.
I guess I was just kind of waiting for someone to bring up the potential for conflict and Roubini was obviously not afraid to say it.
Look throughout US history (or any nations) and you'll notice a trend that wars are usually fought about every 20-30 years. I'll list our major wars.
1744 French American War
1776 War of Independence
1812 War of 1812
1846 Mexican War
1861 Civil War
1898 Spanish American War
1917 WWI
1940 WWII
1950 Korea
1960-1975 Nam
1990 Gulf #1
2001-Present Afghanistan & Gulf #2
The point is that we go to war often enough that I'm sure you can find all sorts of correlations between event A happens and then as often as not we go to war shortly afterwards.
But there are a number of circumstances which were quite different in WWII than now. For instance, Germany was floundering under punitive measures. I'm pretty convinced a depression will increase violent crime rates and other measures of social dissidence, but the world has been a violent place for the last several thousand years. Even if there are some wars, I don't know how you'd determine how much a global recession is to blame. I mean, if we have WWIII then yeah...but what if it's closer to what we're doing in Iraq and those types of wars. Maybe Russia finishes annexing Georgia, or India/Pakistan have a short non-nuclear war. I don't know that things like that would stick out in history as being caused by a global recession.
Absolutely. I think it's a poor foundation to argue WWII was not related to economic conditions, though my understanding is that reparations required of Germany and the way they destroyed their currency to make those payments has as much if not more to do with WWII than our Great Depression. Of course, Germany's financial crisis and the Great Depression will be forever linked. It's just unclear to me that we can use that instance as a template for what will happen over the next 10 years now.
So while economy is not always the main catalyst for wars, it can be used by people to justify their means or can be used to rally nationalistic fervor. It's much easier to blame someone else for your woes rather than look at yourself. I think all of the chatter about the CRA causing our current economic troubles is a good example of this.
Tell that to an asset holding that bought $35b of mortgages for $6.5b. With only 50% of those mortgages in some kind of hardship, thats not bad apples. Considering if the mortgages fail, you own the underlying property.
Also on the war issue, it should be noted that crime always goes up when the economy is bad. So we'll probably have plenty of issues domestically as well.
This, I believe, is the most likely issue to destabilize the world. Which is why I consider energy independence - the kind that comes largely from the sun or the atom and not the kind where Alaskan oil covers 1% of our demand - to be perhaps the most vital issue at stake this autumn.
True, and it looks like solar is getting close to viable. In the meantime, every billion dollars worth of oil we get from Alaska is one billion less in the pockets of Putin, Chavez, or the Middle East. We can use the tax proceeds from Alaskan oil to subsidize development of pilot facilities to get unit costs down on the solar equipment.
I completely agree. Energy independence I think has been the most important issue our country is facing for the last few years. I'm really hoping that the recent drop in oil prices doesn't hurt us moving forward on this. Wierd to say that Jimmy Carter was dead on about this subject.
Anyone ever read much on Brazil and how they became energy independent?
Price fixing gasoline and ethanol, cutting down huge chunks of rain forest to grow sugar cane for ethanol, and heavily subsidizing the national oil company.
As much is made of Brazil's "independence", they still import about 20% of their oil, all their natural gas, and some other energy products. Their per capita gas usage is much lower than the US, of course. And in truth, sugar cane based ethanol is not as renewable is it's claimed to be. When rain forest is cleared to grow cane, the land supports a few really good crops; but after that it requires fertilizer. Or, the farmers just chop down another swath and repeat the cycle.
Not much, but a quick google shows that US per capita energy consumption is about 10 times what it is in Brazil. Brazil has large amounts of hydroelectric power, and has the second highest oil reserves in Latin America.
I concur with Billy. We would be better off to consider the example of Iceland or even Germany
That's misleading. Solar power is viable today. It has been viable for decades, but just too expensive. Is still a bit more costly than coal, but then so is oil. But this line of questioning misses the paradigm shift occurring today.
In approximately 1 year, the first plug-in hybrid cars will go on sale. Until that day, you could replace coal fired electricity plants with solar, hydro, wind, or nuclear until the cows came home without reducing our oil usage. The switch to plug-in hybrids, however, changes everything...and it will happen rapidly. Meanwhile it will take perhaps 10 years to even get one oil well in ANWR running at production rates.
The problem with "drill baby drill" isn't that it's environmentally unfriendly (well, maybe it is but so are exurbs), the problem is that it is a foolish boondoggle that will waste time and resources which could be put to far more effective use elsewhere. If solar power received comparable subsidies to oil, there are a number of huge projects, which could be completed in the next 2-3 years. Unfortunately, congress has hesitated in renewing those subsidies, and it's short-sighted and narrow minded thinking that's to blame. I think this is the price we pay for terrible science education.
While we could switch to solar by fiat, if the US becomes economically uncompetitive because of the higher costs then it just won't work. Furthermore, if solar costs more, that is probably because more resources are going into making it and maintaining it than it produces. It would be like the ethanol disaster, but uglier.
Oil taxes amount to about $60 billion in tax revenue each year, not including income taxes. How many billions of revenue are there in solar taxes? Since that money notionally goes into roads, that money will have to be raised some other way to continue to pay for the roads.
First, I never suggested that. Any "one source solution" to energy is likely to be flawed, naive, and wasteful. I doubt we'll see 100% renewable or carbon neutral energy use in this country at any point during my lifetime.
Second, you are using bad math, by ignoring variables. All solar costs are present day costs. Burning coal or oil is burning millions of years of captured energy, and you aren't even including the carbon costs. If we're talking about the cost of oil, we shouldn't ignore that we are at war in Iraq because of oil. I'll get back to this point later.
Moreover, you are arguing outdated points Jon. I said solar was viable but too expensive. That's not really true anymore. Consumer panels are under $4 per watt and dropping; down from $100 per watt in the 1970s. Last year, processes for building solar panels at less than a dollar per watt started being announced. These are easy to dismiss as empty promises, but profitable companies like First Solar are pumping money into these production facilities today. These will deliver soon. Also, comparing it to ethanol is simply ignorant. Solar power is net positive, well tested at larger scales(Germany), and it doesn't use up food that people need to eat.
So, using current prices solar power is not that expensive, but your only justifiable point was that this could cause us to be economically uncompetitive. That's short-sighted, because it ignores the myriad additional costs of oil. If count the soldiers who keep oil flowing, the weapons to protect our interests, the trade deficit, the national debt, and financing of all that debt...well, it's hard to conclude that sticking with oil will do anything but continue to erode our economy until it fails.
This discussion reminds me a type of person - case-is-shut guy. He likes to know the "right" answers, but dislikes studying emerging trends. He learns about a debate, pays attention until it appears to be resolved, and for the rest of his life that answer is the only valid one. Just to reiterate, solar costs have dropped by 96% in 30 years, while the cost of oil/coal has only risen. Which do you think is most likely to destroy our economic competitiveness?
PUD is testing 15 tide and current generators, which I think is a great resources.
Wind power has proven to be a long lasting product as well as recouping upfront costs in 6-7 years.
Underground Thermal power is a good option for some areas.
I think there is not one single approach, but four or six that should be taken at the same time.
Also, if there is ever a way to stabilize nuclear waste into a solid form, then I think that's a great option for power as well, because then it'll be pretty safe.
Easy. Tax the use of resources which we don't want to be using as much of. Yes, it's as simple as raising gasoline tax. Sure, a $4/gallon gasoline tax would not be particularly popular, but it'd get the job done.
Well, there is a way to do that. These reactors have several advantages (and some disadvantages) to current systems. The primary limit on nuclear power is actually limitations we've put on ourselves rather than technical.
The problem roughly boils down to the fact that humans are very poor at evaluating risk, especially when it is unlikely or particularly catastrophic. The same principal at play when people feel safer in cars than airplanes is why we don't use more nuclear energy.
Se la vie.
Not sure if you are aware of this, but "drill, baby, drill" doesn't mean really on oil only. It means use oil in the short term while development continues on the other processes. Each one has major issues, not all of them technical, before they can be scaled up to a national level, and there needs to be a lot of money spent to make that happen. Domestic oil can help provide that money and energy in the interim.
While there are many promising candidates, they need more work to prove that they can scale up. If we stop further oil exploration, we are running the risk of ending up in a blind alley, and still ten years away from new oil. While $4/gal gas tax could supply the revenue, if you can't get that tax passed, then it isn't going to happen, and anything that depends on it is then just a pipe dream. Similarly with wind. All they have to do is kill one endangered bird and you then have years of litigation. Did you see the recent study about how they make bat's lungs explode without the bat even striking the blades?
Solar plans that depend on continued subsidies also have to face the fact that we just spent $700 billion with no end in sight. While continued solar subsidies would be wonderful, if the well of borrowed money runs dry, then there will be no more subsidies, no matter how much benefit they would provide. We need to start drilling now so we don't find ourselves up the creek in a few years without oil and prices even higher.
And when someone says, "drill, baby, drill", they do think that this will solve our problems. I've talked to at least a dozen people who think that drilling more will solve our energy problem. If they meant something other than that, then I think they would say something different.
I said that I do think that we need to drill more, but that it's not going to help us much if at all.
Also, it should be noted that oil companies already have millions of acres in land leases that could be drilled on that they're not drilling on. Nothing is stopping them from doing this.
One point of clarification - "Drill, baby, drill" inherently includes ANWR, which moves the 200k BBL/day up to about 800 BBL/day in a 7-10 year window. Which is still barely a blip on the map in terms of global production.
I'll second what Chuck said about the rest of your argument. But I'll weigh in on subsidies. I don't think anyone would suggest perpetual subsidies...unless we're talking about oil, which it appears you would like to perpetually subsidize.
Solar power is unique today because it is almost cost competitive. Without subsidies, it costs a little too much, but with them it is competitive. We're on the edge of really benefiting from economies of scale, and a little extra cash today could help considerably, meaning that in 5 years they won't be needed. And, even if we do continue to subsidize it, at least the money will be going to American workers.
If we had subsidized solar panels in the 70s, it would have knocked some years off the development cycle. Perhaps they would have been cost competitive in 2004 instead of the likely 2010/2011 frame. With energy prices leaping the last couple years, a lot of lives could have been made easier if they could have invested in solar power and limited their risk of higher energy prices. With housing prices booming, we would be in a much better spot for national security if solar panels had been the flipper upgrade instead of granite countertops.
Besides, I don't think anyone here is arguing against drilling. We're just pointing out how myopic it is to scream it at the top of your lungs just because you drive too large of a car.
Most of the people who are screaming for domestic drilling do not understand how the oil markets work. As with Charles, many of the "drill baby drill" proponents I've heard believe that drilling the OCS and ANWR will eliminate our need for foreign oil, and that once we're not using foreign oil we don't have to really pay for it, so all these countries that don't really like us (like Canada, our #1 supplier) stop getting all our money.
The reality is that gasoline and other oil byproducts are produced by corporations, whose primary interest is - hold your breath - maximizing profit! OPEC can jack the price around much faster than any of the major oil producers can ramp up US based capacity. And it should be noted that these same corporations own/lease the world's oil supplies. The lease money flows to the various national governments.
As far as abandoning oil or foregoing exploration, it'll never happen. Even if we stopped using gasoline today, oil and its byproducts are still a vital cog in the industrial wheel. The major oil companies all have billions of barrels of untapped reserves that are legally accessible. They don't tap them all because they can't. It's not economical, for one, and even if it is there's a long wait to get offshore drilling rigs, oil tankers, etc. There's no dark alley here.
Also very true.