Administrator

A COUPLE FASCINATING HOURS WITH NEIL HOWE

I had the pleasure of spending two hours with Neil Howe today. On his way back to Washington DC from a meeting with a client in NYC he stopped at 30th Street Station and we grabbed a bite to eat and chatted for a couple hours. Neil’s background is fascinating. His grandfather was astronomer Robert Julius Trumpler. His father was a physicist and his mother was a professor of occupational therapy. I know there has been a dominant opinion on this site that liberal arts degrees are worthless. I don’t think any college degree is worthless. I realize we need more engineers and scientists, but many people are not wired for these professions. We need writers, historians, and thinkers too. Neil Howe is a perfect example. His undergraduate degree from Berkley was in literature. He then earned graduate degrees in economics and history. His well rounded education has given him a much broader view of the world. And he’s a Boomer. Proof that all Boomers aren’t bad.

I had never met Neil. We have had occasional email correspondence and he was the star of Generation Zero, in which I had tiny part. He is a famous man. He’s written or co-written 15 books. He runs a very successful company called Lifecourse Associates. Based on my two hours in his acquantance you would never know he was a famous person. He is extremely down to earth. He is a nice guy. I never felt intimidated, even though his brain power is out of my league. He was actually interested in my background and my opinions.

But enough small talk. You want to know what he thinks about our current Fourth Turning. He was proud that some distinguished institutions had agreed with the Strauss & Howe dating definitions for Boomers, Xers, and Millenials. His starting point for this Fourth Turning is 2007. We are only four years into this Turning and haven’t reached regeneracy yet. I asked him why regeneracy had begun in the last two Fourth Turnings by year four, but hasn’t begun yet. He said that each Turning has its own flow. We agreed that something huge would need to happen in order to create a regeneracy in this country. It could be an economic collapse or it could be war.

He believes the situation which has the biggest potential to blow up the world is Iran. He thinks people are underestimating the implications of a conflict with Iran. He thinks Israel will act unilaterally to keep Iran from getting a nuclear bomb. I asked him if he thinks there will be a world war during this Fourth Turning. He doesn’t think it will be a world war. He expects regional conflicts in the Middle East.

I asked him why the Boomers didn’t seem to be supporting and leading the Millenial generation. He said that within families Boomers and Millenials are very close. This will ultimately exhibit itself. He thinks Boomers will eventually choose to sacrifice some of their entitlements in order to give Millenials a fighting chance at a future. We discussed the upcoming presidential election. He had some nice things to say about Ron Paul. He has been surprised by Newt Gingrich’s rise in the polls. Neil has known Gingrich for 20 years since he has worked on public policy in DC. He believes his past will come back to haunt him. He thinks Romney is likely to win the Republican nomination by default. If the economy stays in the dumper, Romney will be our next President. He is a Prophet/Boomer leader. Neil doesn’t think Bloomberg could win as a 3rd party candidate because of his association with Wall Street. Anyone associated with Wall Street is toxic.

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His opinion about OWS was interesting. He says that the movement is made up of 50% Millenials. He thinks the creators of the movement are actually anarchist Boomers trying to use the Millenials for their own purposes. He thinks the movement has a lot of passion but not a lot of depth. His firm has done surveys and he found that most Millenials don’t even know there is an OWS movement. I asked him whether libertarians are likely to be happy with this Fourth Turning. He said that libertarians have an impact early in a Fourth Turning (Ron Paul, Tea Party), but once the regeneracy occurs people rally around the central authority and government is likely to take on more power and control. Not a happy thought.

Neil lamented what a great opportunity was missed in early 2009 by Barack Obama. The situation in the country was awful. He had both Houses in Congress. His popularity was at its peak. He could have done anything. The country could have accepted short term pain and began to fix our structural problems. He could have had an orderly liquidation of the Wall Street banks. He could have combined short term stimulus with a long term fix for our entitlement programs. But instead he rolled over for Wall Street and dished out Keynesian pork to his supporters. A once in a lifetime chance was missed.

He believes the Federal Reserve policies are disastrous. Zero percent interest rates have sucked the vitality from our economy. The policies are exacerbating our debt problems. People have no incentive to save with zero interest rates. I told him that TBP members are anxious to know what happens next. Here’s where you’ll be disappointed. Neil doesn’t make predictions of events. There will always be dramatic events as time passes, but it is how generations react to those events that matter. There is no doubt that it will take a dramatic event to create a regeneracy of spirit in this country. The triggers for this Crisis were clearly visible in 1997 when Strauss and Howe wrote their classic book – debt, civic decay, and global disorder. The toxic combination is still roiling the world. We can only guess at the timing and specific events that will push us into the next phase of this Crisis.

I told Neil that I end many of my posts these days with, “Fourth Turnings sure are interesting.” He thought that was funny. With Neil’s train due to arrive in a few minutes we got up to say our goodbyes. We agreed that we are living in interesting times. He joked that at least we know how this will end, which is more than most people. He is going to revive his Fourth Turning blog and asked if I would contribute articles. I told him I’d be honored.

All in all, it was a fascinating and enlightening two hours having a great discussion with a brilliant man.

HMMM. HOW CONVENIENT – DEBT, DRONES & DEMAGOGUES

So Iran shoots down one of our drones. Now the questions. Are we flying spy drones over Iran in order to provoke them into doing something stupid? Did we purposely allow it to be shot down? Will Iran’s blustering and threats to retaliate allow the U.S. to create a foreign conflict in order to take the focus off our imploding economy? China declared last week that they would be willing to go to war in support of Iran. Are we approaching an Archduke Ferdinand moment when countries are forced to choose sides in order to not lose face? Could our Fourth Turning War be just over the horizon? If conflict starts with Iran, what will happen to the price of oil? How many more liberties and freedoms will be sacrificed when the oligarchs lead us into another undeclared war of choice?

If you don’t fly spy drones over foreign countries that we are not at war with, they can’t get shot down. How would we react if China or Russia was flying spy drones over the U.S.?

The ignorant masses will be convinced that Iran is at fault and deserves to be obliterated. Comfortably numb.

Iran Military Shoots Down US Drone, Threatens Response

Submitted by Tyler Durden on 12/04/2011 10:05 -0500

From PressTV:

A senior Iranian military official says Iran’s Army has shot down a remote-controlled reconnaissance drone operated by the US military in the eastern part of the country.

The informed source said on Sunday that Iran Army’s electronic warfare unit successfully targeted the American-built RQ-170 Sentinel stealth aircraft after it crossed into Iranian airspace over the border with neighboring Afghanistan.

He added that the US reconnaissance drone has been seized with minimum damage.

The RQ-170 is a stealth unmanned aircraft designed and developed by Lockheed Martin Company.

The US military and the CIA use the drone to launch missile strikes in Afghanistan and in Pakistan’s northwestern tribal region.

The unnamed Iranian military official further added that “due to the clear border violation, the operational and electronic measures taken by the Islamic Republic of Iran’s Armed Forces against invading aircraft will not remain limited to the Iran’s borders.

The report comes as the United States has beefed up its military presence in and around the Persian Gulf region in recent months in the wake of popular uprising in Bahrain.

The US Department of Defense says Washington is closely monitoring the developments in Bahrain, which is the headquarters of the US Navy’s Fifth Fleet and holds some 4,200 US service members.

From Reuters:

Iran’s military said on Sunday it had shot down a U.S. reconnaissance drone aircraft in eastern Iran, a military source told state television.

“Iran’s military has downed an intruding RQ-170 American drone in eastern Iran,” Iran’s Arabic-language Al Alam state television network quoted the unnamed source as saying.

“The spy drone, which has been downed with little damage, was seized by the Iranian armed forces.”

Iran shot down the drone at a time when it is trying to contain foreign reaction to the storming of the British embassy in Tehran on Tuesday, shortly after London announced that it would impose sanctions on Iran’s central bank in connection with Iran’s controversial nuclear enrichment programme.

Britain evacuated its diplomatic staff from Iran and expelled Iranian diplomats in London in retaliation, and several other EU members recalled their ambassadors from Tehran.

The attack dragged Iran’s relations with Europe to a long-time low.

Washington and EU countries have been discussing measures to restrict Iran’s oil exports since the United Nations nuclear watchdog issued a report in November with what it said was evidence that Tehran had worked on designing an atom bomb.

And from AP:

Iran’s semiofficial Fars news agency says the country’s armed forces have shot down an unmanned U.S. spy plane that violated Iranian airspace along its eastern border.

The report says the plane was an RQ170 type drone and is now in the possession of Iran’s armed forces. The Fars news agency is close to the powerful Revolutionary Guard.

Iran is locked in a dispute with the U.S. and its allies over Tehran’s disputed nuclear program, which the West believes is aimed at the development of nuclear weapons. Iran denies the accusations, saying its nuclear program is entirely peaceful.

It appears Iran plans to retaliate:

Iran’s response to the downed U.S. drone’s violation of its airspace will not be limited to the country’s borders, a military source told state television.

“The Iranian military’s response to the American spy drone’s violation of our airspace will not be limited to Iran’s borders any more,” Iran’s Arabic language Al Alam television quoted the military source as saying, without giving details.

Iran said in July it had shot down an unmanned U.S. spy plane over the holy city of Qom, near its Fordu nuclear site.

As a reminder from Stratfor, here is how the US navy was deployed most recently as of Wednesday. Looks like life for the Stennis boys is about to get exciting.

HOW ABOUT $175 A BARREL OIL?

I think the chances of military conflict with Iran in the next two years are better than 50%. Students stormed the UK embassy in Iran. London is kicking the Iranians out of their embassy in London. Israel blew up an Iranian missile base a couple weeks ago. Israel will not let Iran get a nuke. Obama needs to distract the public from our terrible economy with a foreign crisis. The implications of Iranian oil coming off the worldwide markets would be devastating. China would not be happy since they get 10% of their oil from Iran. The world is already on the verge of collapse and a surge in oil prices would create a worldwide depression. This Fourth Turning sure is interesting.

Funds, refiners ponder oil Armageddon: war on Iran

REUTERS – Oil consuming nations, hedge funds and big oil refineries are quietly preparing for a Doomsday scenario: An attack on Iran that would halt oil supplies from OPEC’s second-largest producer.

Most political analysts and oil traders say the probability of military action is low, but they caution the risks of such an event have risen as the West and Israel grow increasingly alarmed by signs that Tehran is building nuclear weapons.

That has Chinese refiners drawing up new contingency plans, hedge funds taking out options on $170 crude, and energy experts scrambling to determine how a disruption in Iran’s oil supply — however remote the possibility — would impact world markets.

With production of about 3.5 million barrels per day, Iran supplies 2.5 percent of the world’s oil.

“I think the market has paid too little attention to the possibility of an attack on Iran. It’s still an unlikely event, but more likely than oil traders have been expecting,” says Bob McNally, once a White House energy advisor and now head of consultancy Rapidan Group.

Rising tensions were clear this week as Iranian protesters stormed two British diplomatic missions in Tehran in response to sanctions, smashing windows and burning the British flag.

The attacks prompted condemnation from London, Washington and the United Nations. Iran warned of “instability in global security.”

While traders in Europe prepare for a possible EU boycott of imports from Iran, mounting evidence elsewhere points to long-odds preparation for an even more severe outcome.

In Beijing, the foreign ministry has asked at least one major Iranian crude oil importer to review its contingency planning in case Iranian shipments stop.

In India, refiners are leafing through an unpublished report produced in March to look at fall-back options in the event of a major disruption.

And the International Energy Agency, the club of industrialised nations founded after the Arab oil embargo that coordinated the release of emergency oil stocks during Libya’s civil war, last week circulated to member countries an updated four-page factsheet detailing Iran’s oil industry and trade.

The document, not made public but obtained by Reuters, lists the vital statistics of Iran’s oil sector, including destinations by country. Two-thirds of its exports are shipped to China, India, Japan and South Korea; a fifth goes to the European Union.

Hedge funds, particularly those with a global macro-economic bias, have taken note, and are buying deep out-of-the-money call options that could pay off big if prices surge, senior market sources at two major banks said.

Open interest in $130 and $150 December 2012 options for U.S. crude oil on the New York Mercantile Exchange (NYMEX) rose by over 20 percent last week. Interest in the $170 call more than doubled to over 11,000 lots, or 11 million barrels. Still more traded over-the-counter, sources say.

McNally says that oil prices could surge as high as $175 a barrel if the Strait of Hormuz — conduit for a fifth of the world’s oil supply, including all of Iran’s exports — is shut in.

IAEA CITES “CREDIBLE” INFORMATION

This month’s speculation of an attack on Iran is the most intense since 2007, when reports showing that Iran had not halted uranium enrichment work fuelled speculation that President George W. Bush could launch some kind of action during his last year in office. Those fears helped fuel a 36 percent rise in oil prices in the second half of the year.

The latest anxiety was set off by the International Atomic Energy Agency’s November 8 report citing “credible” information that Iran had worked on designing an atomic bomb. A new round of sanctions followed, including the possibility that Europe could follow the United States in banning imports.

That alone would roil markets, but ultimately would likely just drive discounted crude sales to other consumers like China.

A more alarming — if more remote — possibility would be an attack by Israel, which has grown increasingly alarmed by the possibility of a nuclear-armed Iran. Israeli Defense Minister Ehud Barak said on November 19 that it was a matter of months, not years, before it would be too late to stop Tehran.

In that context, every tremor has been unnerving for markets. Some experts say an explosion at an Iranian military base earlier in the month was the work of Mossad, Israel’s intelligence agency. An unusually large tender by Israel’s main electricity supplier to buy distillate fuel raised eyebrows, although it was blamed on a shortage of natural gas imports.

REFINERS BRACE

No country has more reason to be concerned than China, which now gets one-tenth of its crude imports from Iran. Shipments have risen a third this year to 547,000 barrels per day as other countries including Japan reduce their dependence. Sinopec, Asia’s top refiner, is the world’s largest Iranian crude buyer.

The Foreign Ministry and the National Development and Reform Commission, which effectively oversees the oil sector, have asked companies that import the crude to prepare contingency plans for a major disruption in supply, a source with a state-owned company told Reuters.

The precautionary measure preceded the latest geopolitical angst and is broadly in line with Beijing’s growing concern over its dependence on imported energy. Earlier this year it issued a notice for firms to prepare for disruptions from Yemen.

But the focus has sharpened recently, the source said.

“The plan is not particularly for the tension this time, but it seems the government is paying exceptionally great attention to it this time,” said the source on condition of anonymity.

In India, which gets 12 percent of its imports from Iran, refiners had a potential preview of coming events when the country’s central bank scrapped a clearing house system last December, forcing refiners to scramble to arrange other means of payment in order to keep crude shipments flowing.

That incident — in addition to the Arab Spring uprising and the Japanese earthquake — prompted the government to document a brief but broad strategy for handling major disruptions.

The document, which has not been reported in detail, says that India could sustain fuel supplies to the market in the event of an import stoppage for about 30 days thanks to domestic storage, and would turn to unconventional and heavier imported crude as a fall-back.

It also urged the country’s state-owned refiners to work on developing domestic storage facilities for major OPEC suppliers, consider hiring supertankers to use as floating storage and to sign term deals to price crude on a delivered basis, a copy of the document seen by Reuters shows.

The government has not tasked refiners with additional preparations this month, industry sources say. And in any event, there’s not much they could do.

“If they cut supplies we will be left with no option than to buy from the spot market or from other Middle East suppliers,” said a senior official with state-run MRPL, Iran’s top India client.

To be sure, there’s only so much any refiner can do. The gap left by Iran will trigger a frenzy of buying on the spot market for substitute barrels, likely leading the IEA to release emergency reserves, as it did following the civil war in Libya, or other countries like Saudi Arabia to step into the breach.

“We probably need to do this ASAP but are putting our heads in the sand so far,” said one oil trader in Europe.

For refiners like Italy’s Eni (ENI.MI) and Hellenic Petroleum (HEPr.AT), the most pressing issue is not necessarily an unexpected outage but an import boycott imposed by their government. France has won limited support for such an embargo, but faces resistance from some nations that fear it could inflict more economic damage.

CHEAP PUNTS

Unlike in 2007, there’s not yet much evidence that a significant geopolitical risk premium is being factored into prices.

European benchmark Brent crude oil has rallied 4 percent in the past two days, partly due to accelerating discussion of a Europen boycott as well as Tuesday’s unrest in Tehran, during which protesters stormed two British diplomatic compounds.

But it is also down 4 percent since the IAEA’s November 8 report. Analysts say that it’s impossible to extract any Iran-specific pricing from a host of other recently supportive factors, including new hope to end Europe’s debt crisis, strong global distillate demand and upbeat U.S. consumer data.

“I don’t think there’s very much evidence (of an Iran premium),” says Ed Morse, global head of commodities research at Citigroup and a former State Department energy policy adviser.

And he does not see an attack as likely: “I think it’s a low probability event. Maybe higher than a year ago, but still low.”

But that is not stopping some from looking ahead. Oil prices would likely spike to at least $140 a barrel if Israel attacked Iran, according to the most benign of four scenarios put forward this week by Greg Sharenow, a portfolio manager at bond house PIMCO and a former Goldman Sachs oil trader.

He refused to predict a limit for prices under the most extreme “Doomsday” scenario in which disruptions spread beyond Iran and the Straits of Hormuz is blocked.

With that in mind, hedge funds are buying cheap options in a punt on an extreme outage. For about $1,500 per contract, a buyer can get the right to deliver a December 2012 futures contract at $150 a barrel; even if prices do not rise that high, the value of the options contract could increase tenfold.

The spark of demand for upside price protection this month is an abrupt reversal from most of this year, when the bias was toward puts that would hedge the risk of economic calamity.

“The kind of put skew we were seeing in the last three to six months was remarkable with people preparing for disaster – the Planet of the Apes trade, another massive market crash,” says Chris Thorpe, executive director of global energy derivatives at INTL FC Stone.

“Only in the last three or four weeks has there been increased call buying.”

Options remain relatively costly compared to earlier in the year, with implied volatility — a measure of option cost — of 43 percent above this year’s average of just below 35 percent, the CBOE Oil Volatility index shows.

But nonetheless it’s clear that for some funds the potential upside of violence in Iran means that interest is increasing.

Says Thorpe: “It’s at the back of people’s minds.”

CENTRAL BANKS IN LAST DITCH DESPERATE MOVE TO SAVE BANKERS AND SCREW YOU AGAIN

When you see such coordinated action by all the major Central Banks in the world, you know the situation is much worse than you are being told by the ruling oligarchy. The confidence and trust is gone. Every major bank in the world is insolvent, whether it be in the U.S., Europe or China. These Central Banks are owned and controlled by the very banks they are bailing out. They are telling you they have it under control. They do not. They have lost control. The debt is too great and will destroy the economic system of the world.

This is a last ditch effort by those in power to grab the last vestiges of middle class wealth. The stock market will soar today, benefitting bankers, politicians, and the 1%. They have solved nothing. The debt remains. The debt will not be paid.

Oil, food and commodity prices immediately soared on this announcement. Again, the wealthy will get richer and the average American will be destroyed by inflation on the things they need to live. The game goes on.

Gold jumped $20 in seconds. It is your only defense against the looting by the evil banking syndicate.

Here Comes The Global, US-Funded Liquidity Bail Out

Submitted by Tyler Durden on 11/30/2011 08:02 -0500

As expected, the Fed has just bailed out the world once again:

FED, ECB, BOJ, BOE, SNB, BANK OF CANADA LOWER SWAP RATES – BBG
ECB, FED other major central bank to lower the pricing of existing USD liquidity swaps by 50BPS

And as we have been writing every single day, the worldwide dollar crunch is now confirmed:

At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar

And finally, a promise to bailout Bank of America when it hits $4.00 again:

U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

This means that the global situation is far, far more dire than the talking heads have said. Luckily, when this step fails, which it will, Mars can always come and bail us out.

For release at 8:00 a.m. EDT

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank are today announcing coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity.

These central banks have agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points. This pricing will be applied to all operations conducted from December 5, 2011. The authorization of these swap arrangements has been extended to February 1, 2013. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice.

As a contingency measure, these central banks have also agreed to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of their currencies should market conditions so warrant. At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise. These swap lines are authorized through February 1, 2013.

Federal Reserve Actions
The Federal Open Market Committee has authorized an extension of the existing temporary U.S. dollar liquidity swap arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank through February 1, 2013. The rate on these swap arrangements has been reduced from the U.S. dollar OIS rate plus 100 basis points to the OIS rate plus 50 basis points. In addition, as a contingency measure, the Federal Open Market Committee has agreed to establish similar temporary swap arrangements with these five central banks to provide liquidity in any of their currencies if necessary. Further details on the revised arrangements will be available shortly.

U.S. financial institutions currently do not face difficulty obtaining liquidity in short-term funding markets. However, were conditions to deteriorate, the Federal Reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to U.S. households and businesses.

HAPPY THANKSGIVING FROM RUSSIA WITH LOVE

The United States has the most bad ass military on the planet. We are really good at pushing around flyweights like Iraq, Afghanistan, and Libya. Are we really looking to take on Russia and China? These are the unintended consequences of sticking our fucking nose into every other country’s business. We aren’t the only country in the world that has “strategic interests”. Russia has a shitload of oil and natural gas. China manufactures half the shit we will be buying on Black Friday and holds about $800 billion of our Treasury bonds.

Has our hubris grown to such a level that we would be willing to start World War III over fucking Syria or Iran? Is this the beginning of our Fourth Turning war? Is this another example of the ruling oligarchy trying to distract the masses from our Greater Depression with a foreign enemy?

Will this country ever come to its senses and realize our Empire is crumbling and the only hope is to voluntarily exit from trying to police the world? WE’RE BANKRUPT!!!!!

My son just received a letter from the the Selective Service Administration informing him he had to register or risk imprisonment or fines.

MY SON WILL NOT BE GOING TO WAR FIGHTING RUSSIANS, CHINESE, SYRIANS, OR IRANIANS TO SATISFY THE NEEDS OF THE CORRUPT CRIMINAL OLIGARCHY THAT RUNS THIS COUNTRY.

WE WILL EITHER LEAVE THIS COUNTRY OR JOIN A REVOLUTION TO DEPOSE THE SCUM CURRENTLY IN CHARGE.

HAPPY THANKSGIVING!!!!

Russia Retaliates Against US: Puts Radar Station On Combat Alert, Prepares To Take Out European Missile Defense Systems

Submitted by Tyler Durden on 11/23/2011 22:50 -0500

Earlier today, we presented the latest developments in the escalating possibility of an imminent air (and potentially land) campaign targeting Syria by the “western world”, a move that would infuriate not only Iran, but also Russia and China, both of which have made it clear they would not sit idly by and let such an “aggression” stand. Now it is Russia’s turn to retaliate. Cutting straight to the chase – in a nationally televized appearance by Russian president Dmitry Medvedev: in response to what the Russian believes is an active incursion and a potential act of eventual aggression on behalf of NATO countries in Eastern Europe (and hence the US), he he said the following (7 minutes in): “First, I am instructing the Defense Ministry to immediately put the missile attack early warning radar station in Kaliningrad on combat alert. Second, protective cover of Russia’s strategic nuclear weapons, will be reinforced as a priority measure under the programme to develop out air and space defenses. Third, the new strategic ballistic missiles commissioned by the Strategic Missile Forces and the Navy will be equipped with advanced missile defense penetration systems and new highly-effective warheads. Fourth, I have instructed the Armed Forces to draw up measures for disabling missile defense system data and guidance systems if need be… Fifth, if the above measures prove insufficient, the Russian Federation will deploy modern offensive weapon systems in the west and south of the country, ensuring our ability to take out any part of the US missile defense system, in Europe. One step in this process will be to deploy Iskander missiles in Kaliningrad Region. Other measures to counter the European missile defense system will be drawn up and implemented as necessary. Furthermore, if the situation continues to develop not in Russia’s favor we reserve the right to discontinue further disarmament and arms control measures. Besides, given the intrinsic link between strategic offensive and defensive arms, conditions for our withdrawal from the New START Treaty could also arise.” That said, he concludes that Russia is still open to dialog. However, if Obama merely intends to bomb any nation at will, we are very much concerned that everything Medvedev has just threatened will be enacted. And exponentially more so when Putin comes back in charge. One thing is certain – Russia is not North Korea, and taking this speech for more empty jawboning is probably not the wisest option.

Is the U.S. About to Invade Syria … and Pick a Fight with China and Russia?

Submitted by George Washington on 11/23/2011 20:02 -0500

Tyler pointed out yesterday and today that the risk of a Syrian war is quickly rising.

I want to amplify on three aspects of this issue:

(1) a war against Syria was planned 10 years ago

(2) the American people don’t want a new war and

(3) Russia and China may strongly react against such a war

THE AMERICAN PEOPLE DON’T WAR WAR … BUT A SYRIAN WAR WAS PLANNED 10 YEARS AGO

I noted in August:

While the U.S. is doing its best to try to whip up support for a war against Syria (a war planned at least 10 years ago), a new Rasmussen poll finds:

Just 12% of Likely U.S. Voters believe the United States should get more directly involved in the Syrian crisis, according to a new Rasmussen Reports national telephone survey. Sixty-six percent (66%) think the United States should leave the Syrian situation alone.

ARE WE PICKING A FIGHT WITH CHINA AND RUSSIA?

This is even more dangerous because China has warned the U.S. against attacking Syria, and Russia has reportedly moved warships into Syrian waters to defend Syria from a U.S. attack.

Relations between the U.S. and Russia have degraded recently. See this and this. This is largely due to the U.S. threatening war against any nation which becomes an economic rival.

May cooler heads prevail.

OCCUPY PISSES OFF EVERYONE

The editorial below was in my paper yesterday. It really grabbed my attention. It was from Dale McFeatters of the Scripps News Service. They are a liberal leaning organization. Their editorials skew to the left. They are sick and tired of Occupy Wall Street. They say it is time to go home and work through the existing establishment rules, regulations and captured party system.

Mayor Bloomberg is an Independent. He is sick and tired of Occupy Wall Street. He destroyed their encampment site yesterday and is fed up with their tactics. He also happens to be a multi-billionaire whose wealth was created from selling his product to Wall Street.

The Mayor of Phila is an ultra-liberal who just won re-election in this bastion of Democratic politics with 75% of the vote. He went on TV this week and said he is fed up with Occupy Phila and their refusal to move when his City Hall construction project begins.

The Mayor of Oakland makes the Mayor of Phila look like a conservative. She ordered an all out attack on the Occupy Oakland encampment.

Fox News and the Wall Street Journal despise the Occupy Wall Street movement and spew lies and misinformation about the movement 24 hours per day. They are the mouthpiece of right wing neo-con Rupert Murdoch, a multi-billionaire. The NY Daily News has been highly critical of the movement and is owned by left leaning Mort Zuckerman.

The narrow minded people who are easily led by the MSM buy into the various storylines spun by a media that does not want this movement to gain traction. They are distracted by minutia when the big picture is so disgusting. They applaud as young people brave enough to fight the elements and make a stand against corruption are bludgeoned and imprisoned for exercising their right to free speech and public assembly, while remaining silent as Wall Street bankers committed the crime of the century – absconding with trillions of American middle class wealth.

Step back for a moment and think. Who is the enemy? Is it really the thousands of young people just starting their lives and lashing out against a system that is designed to benefit Wall Street bankers, Mega Corporations and politicians of both parties in Washington DC?

The enemy is clear to me. The entire financial/corporate/political establishment is corrupt, dysfunctional, and benefits only the ruling oligarchy of this country. The nation’s lifeblood has been sucked dry by these vampires. The entire system has been hijacked by the few. You can call it crony capitalism or corporate fascism, but the bottom line is that the average American is getting screwed and the people getting the most screwed are the Millenial generation that is being left with an un-payable debt burden, no jobs, and no hope for a better tomorrow. This is why they are enraged. This is why they are protesting.

The self righteous Boomer generation leaders who control the levers of power in Washington DC, Wall Street and the corporate boardrooms do not want the system to change. They like the system just fine. Therefore, they hate a movement that threatens their wealth, power, and status. Both parties are frightened by the Occupy movement. The left and the right have their talking points and the existing system works just fine as they both get enriched as the country plunges deeper into debt by $4 billion per day.

The non-thinking and willfully ignorant people of this country need to snap out of their daze and think for themselves. The endless propaganda spewed at them day after day has dulled their sense of right and wrong. The Occupiers have begun to open the eyes of some people. They have forced a discussion of issues the establishment wants to keep buried. Neither Bush or Obama has attempted to go after the criminals on Wall Street. That is the tell. Both parties are captured. The Dodd-Frank bill was a toothless 700 page waste of time written by bank lobbyists.

When I see people and pundits declare the Occupy Movement irrelevant, I laugh at their utter stupidity. Would hundreds of billions been transferred from the criminal Wall Street banks to credit unions without the Occupy Movement spurring this effort? Would the $5 per month debit card fee inflicted on Americans by the criminal Wall Street banks been withdrawn without the rage and anger of the Occupy Movement? The answer is NO. Wall Street hates having the Eye of Mordor focused on their criminal and immoral activities.

This movement will not die because police thugs kick them out of parks using their 100,000 rules, regulations, ordanances, laws, and curfews. A society that depends on so many laws to “protect” its citizens has descended into a moral cesspool. I don’t need laws to tell me right from wrong and moral from immoral. The heart of these protests is a system that is broken. There will be many different solutions offered by those that are angry, but the BIG PICTURE is that the system must be brought down. It will not fix itself. Tinkering on the edges will not fix it.

We are in the midst of a Fourth Turning. It is a chaotic and confusing time. Anger, misery and bloodshed are a given. The existing social order will be swept away. That is guaranteed. What replaces it will be up to us. I’ll support any movement that spits in the eye of the establishment. I’ll support people like Ron Paul that want to tear down the established order. Everyone will need to choose sides. There is no fence sitting during the Fourth Turning. I hope you are pissed off. I know I am.

Editorial: Occupy protesters have made their point. Now go home

Submitted by SHNS on Mon, 11/14/2011 – 15:20

An editorial / By Dale McFeatters, Scripps Howard News Service

In 1981, a group of demonstrators set up camp outside a British air base to protest the government’s decision to allow U.S. nuclear-tipped cruise missiles to be based there.

The Greenham Common Women’s Peace Camp initially generated a great deal of publicity, inspired imitators in other countries, sporadically tried to block access to the air base, and perhaps reached its zenith in 1983 when as many as 70,000 people turned out for one of their demonstrations.

The women survived several attempts by police to evict them, and eventually the authorities left their tent cities alone, as long as the women, and they were almost all women, confined themselves to picketing, leafleting and chanting.

In 1991, thanks to a nuclear-arms treaty with the Soviet Union, the last of the cruise missiles were removed, taking with them, one would have thought, the reason for the camp. But the women stayed on for nine more years, expressing an increasingly vague and inchoate commitment to “peace.” Many of the Greenham women cited a sense of unity, sisterhood, shared purpose and, when pressed, little desire to return to the humdrum routine of their former lives.

One senses that, in accelerated fashion, the Occupy Wall Street movement has arrived at that point. On Wall Street and in cities across the country, the protesters have effectively made their point about income inequality — the 1 percent versus the 99 percent; lopsided tax breaks given to hedge-fund managers and the proclivity of Wall Streeters to lavishly reward themselves regardless of whether their performance merits it. And, yes, economically the great middle class has been stagnant for a decade or more.

As the Occupy movement drags on — the first encampment went up Sept. 17 — the issues that inspired it are receding in the public consciousness and the issue has increasingly become the encampments themselves.

There have been problems of noise, sanitation, isolated incidents of crime and violence and the inevitable run-ins with police, but generally the Occupy movement has been a benign one. But its time in the public square is over. Public space meant for the enjoyment of the many should not be arrogated to advance the interests of the few.

Go home. Find political candidates who share your views and go to work for them. Raise money. Man phone banks. Knock on doors. Help the poor and minorities and those with limited English get government IDs in states that have passed voter-suppression laws.

And don’t forget to vote yourself. It really works in this country. Always has.

(Distributed by Scripps Howard News Service, http://www.scrippsnews.com)

OCCUPY WALL STREET CAMP DESTROYED BY NYPD

Things are about to get interesting. November 17 now takes on more significance. The establishment is getting rattled because this movement hasn’t dissipated after two months.

NYPD IS RAIDING OCCUPY WALL STREET

Posted 6 hours ago on Nov. 15, 2011, 1:20 a.m. EST by OccupyWallSt

Liberty Square (Zuccotti Park), home of Occupy Wall Street for the past two months and birthplace of the 99% movement that has spread across the country and around the world, is presently being evicted by a large police force in full riot gear.

We will reoccupy!

Updates
3:36 a.m. Kitchen tent reported teargassed. Police moving in with zip cuffs.
3:33 a.m. Bulldozers moving in
3:16 a.m. Occupiers linking arms around riot police
3:15 a.m. NYPD destroying personal items. Occupiers prevented from leaving with their possessions.
3:13 a.m. NYPD deploying sound cannon
3:08 a.m. heard on livestream: “they’re bringing in the hoses.”
3:05 a.m. NYPD cutting down trees in Liberty Square

2:55 a.m. NYC council-member Ydanis Rodríguez arrested and bleeding from head.

2:44 a.m. Defiant occupiers barricaded Liberty Square kitchen
2:44 a.m. NYPD destroys OWS Library. 5,000 donated books in dumpster.
2:42 a.m. Brooklyn Bridge confirmed closed
2:38 a.m. 400-500 marching north to Foley Square
2:32 a.m. All subways but R shut down
2:29 a.m. Press helicopters evicted from airspace. NYTimes reporter arrested.
2:22 a.m. Frontpage coverage from New York Times
2:15 a.m. Occupiers who have been dispersed are regrouping at Foley Square
2:10 a.m. Press barred from entering Liberty Square
2:07 a.m. Pepper spray deployed — reports of at least one reporter sprayed

2:03 a.m. Massive Police Presence at Canal and Broadway

1:43 a.m. Helicopters overhead.
1:38 a.m. Unconfirmed reports of snipers on rooftops.
1:34 a.m. CBS News Helicopter Livestream
1:27 a.m. Unconfirmed reports that police are planning to sweep everyone.
1:20 a.m. Subway stops are closed.
1:20 a.m. Brooklyn bridge is closed.
1:20 a.m. Occupiers chanting “This is what a police state looks like.”
1:20 a.m. Police are in riot gear.
1:20 a.m. Police are bringing in bulldozers.

ENERGY INDEPENDENCE – THE BIG LIE

PRICE OF A BARREL OF OIL 1978 – $14.00

“We are the generation that will win the war on the energy problem and in that process, rebuild the unity and confidence of America.” – President Jimmy Carter, 1979

“We have it in our power to act right here, right now. I propose $6 billion in tax cuts and research and developments to encourage innovation, renewable energy, fuel-efficient cars, and energy-efficient homes.” – President Bill Clinton, 1998

“I think that in ten years, we can reduce our dependence so that we no longer have to import oil from the Middle East or Venezuela. I think that’s about a realistic time frame…That’s why I’ve focused on putting resources into solar, wind, biodiesel, geothermal. These have been priorities of mine since I got to the Senate, and it is absolutely critical that we develop a high fuel efficient car that’s built not in Japan and not in South Korea, but built here in the United States of America.” – President Barack Obama, 2008

“We don’t have to wait on OPEC anymore. We don’t have to let them hold us hostage. America’s got the energy. Let’s have American energy independence.”- Rick Perry, CNN Debate, October 18

“We must become independent from foreign sources of oil. This will mean a combination of efforts related to conservation and efficiency measures, developing alternative sources of energy like biodiesel, ethanol, nuclear, and coal gasification, and finding more domestic sources of oil such as in ANWR or the Outer Continental Shelf (OCS).” – Mitt Romney

PRICE OF A BARREL OF BRENT OIL 2011 – $114.00

It is too bad that our 255 million cars can’t run on hot air. American presidents have propagated the Big Lie of energy independence for the last three decades. The Democrats have lied about green energy solutions and the Republicans have lied about domestic sources saving the day. These deceitful politicians put the country at risk as they misinform and mislead the non-thinking American public. They have been declaring our energy independence for 30 years, but we import three times as much oil today as we did in the early 1980’s. The CPI has gone up 350% since 1978, but the price of a barrel of oil has risen 800% over the same time frame. Today, I hear the same mindless fabrications from politicians and pundits about our ability to become energy independent. Any critical thinking analysis of the hard facts reveals that the United States will grow increasingly dependent upon other countries to supply our energy needs from a dwindling and harder to access supply of oil and natural gas. The fantasy world of plug in cars, corn driven vehicles and solar energy running our manufacturing plants is a castle in the sky flight of imagination. The linear thinking academic crowd believes a technological miracle will save us, when it is evident technology fails without infinite quantities of cheap oil.

I know the chart below requires some time to grasp, but I’m sure the average American can take five minutes away from watching Jersey Shore, Dancing with the Stars, or the latest update of the Kardashian saga to understand why the propaganda about energy independence is nothing but falsehoods. You have U.S. energy demand by sector on the right and the energy source by fuel on the left. Total U.S. energy use is nearly 100 quadrillion Btu. In physical energy terms, 1 quad represents 172 million barrels of oil (8 to 9 days of U.S. oil use), 50 million tons of coal (enough to generate about 2% of annual U.S. electricity use), or 1 trillion cubic feet of natural gas (about 4% of annual U.S. natural gas use).

Please note that 37% of our energy source is petroleum, which supplies 95% of the energy for our transportation sector. That means your car and the millions of 18 wheelers that deliver your food to your grocery stores and electronic gadgets to your Best Buy. You can’t fill up your SUV with coal, natural gas, nuclear energy or sunshine. Without the 7 billion barrels of oil we use every year, our just in time mall centric suburban sprawl society would come to a grinding halt. There is no substitute for cheap plentiful oil anywhere in sight. The government sponsored ethanol boondoggle has already driven food prices higher, while requiring more energy to produce than it generates. Only a government “solution” could raise food prices, reduce gas mileage, and bankrupt hundreds of companies in an effort to reduce our dependence on oil. Natural gas as a transportation fuel supplies 2% of our needs. The cost to retro-fit 160,000 service stations across the country to supply natural gas as a fuel for the non-existent natural gas automobiles would be a fool’s errand and take at least a decade to implement.

The green energy Nazis despise coal and nuclear power, which account for 31% of our energy supply. They want to phase coal out. They aren’t too fond of fracking either, so there goes another 23% of our supply. You might be able to make out that itsy bitsy green circle with the 7% of our supply from renewable energy. And more than half of that energy is supplied by hydro power. Less than 2% of our energy needs are met by solar and wind. For some perspective, we need to use the equivalent of 17 billion barrels of oil per year to run our society and solar and wind supplies the equivalent energy of about 300 million barrels of that total. I think our green energy dreams will come up just a smidgen short of meeting our demands. Nothing can replace oil as the lifeblood of our culture and there is no domestic supply source which will eliminate or even reduce our dependence upon the 10 million barrels per day we import from foreign countries. There are some hard truths that are purposefully ignored by those who want to mislead the public about the grim consequences of peak cheap oil:

The earth is finite. The amount of oil within the crust of the earth is finite. As we drain 32 billion barrels of oil from the earth every year, there is less remaining within the earth. We have drained the cheapest and easiest to reach 1.4 trillion barrels from the earth since the mid 1800s. The remaining recoverable 1.4 trillion barrels will be expensive and hard to reach.
The United States has about 2% of the world’s proven oil and gas reserves, but consumes 22% of the world’s oil production and 27% of the world’s natural gas production.
Demand for oil will continue to rise no matter what the United States does, as the developing world consumption far outstrips U.S. consumption. Oil is fungible and will be sold to the highest bidder.
The concept of energy returned on energy invested (EROEI) is beyond the grasp of politicians and drill, drill, drill pundits. EROEI is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is less than or equal to one, that energy source becomes an “energy sink”, and can no longer be used as a primary source of energy. Once it requires 1.1 barrels of oil to obtain a barrel of oil, the gig is up.
There is a negative feedback loop that revolves around oil supply, oil price and economic growth. As demand continues to rise and supply is more difficult to access, prices will rise. Since oil is an essential ingredient in every aspect of our lives, once the price reaches $120 to $150 a barrel economic growth goes into reverse. Demand crashes and investment in new sources of energy dries up. Rinse and repeat.

Finite World

World oil production peaked in 2005 has been flat since then, despite a continuous stream of promises from Saudi Arabia that they are on the verge of increasing production. The chart below from the U.S. Energy Information Administration propagates the standard fabrications about energy supplies. Even though worldwide oil production has clearly peaked, the oil industry PR whores and government agencies continue to project substantial production growth in the future. The mainstream media trots out Daniel Yergin whenever it wants to calm the masses, despite his track record of being 100% wrong 100% of the time. The brilliance of his July, 2005 Op-Ed shines through:

“Prices around $60 a barrel, driven by high demand growth, are fueling the fear of imminent shortage — that the world is going to begin running out of oil in five or 10 years. This shortage, it is argued, will be amplified by the substantial and growing demand from two giants: China and India. There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day — from 85 million barrels per day to 101 million barrels a day — a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.”

Oil production capacity has not grown by one barrel since Yergin wrote this propaganda piece. This is despite the fact that prices have almost doubled, which should have spurred production. The current energy independence false storyline – the Bakken Formation – has gone from production of 10,000 barrels per day in 2003 to 400,000 barrels per day now, while the hundreds of millions invested in developing the Canadian tar sands have increased production by 50% since 2005. Despite these substantial increases in output, worldwide production has remained flat as existing wells deplete at the same rate that new production is brought online.

The facts are there is approximately 1.4 trillion barrels of recoverable oil left in the crust of the earth. We currently suck 32 billion barrels per year out of the earth. This means we have 44 years of oil left, at current consumption levels. But we know demand is growing from the developing world. Taking this fact into consideration, we have between 35 and 40 years worth of recoverable oil left on the planet. That is not a long time. Additionally, the last 1.4 trillion barrels will much more difficult and costly to extract than the first 1.4 trillion barrels. The remaining oil is miles under the ocean floor, trapped in shale and tar sands, and in the arctic. Despite these hard facts, governmental agencies and politicians continue to paint a rosy picture about our energy future. I watched in stunned amazement last week as five bozos on the McLaughlin Group news program unanimously proclaimed the U.S. would become a net exporter of oil in the coming decade. Do these supposedly intelligent people not understand the basic economics of supply, demand and price?

It seems the governmental organizations always paint the future in the most optimistic terms, despite all facts pointing to a contrary outcome. The EIA predicts with a straight face that oil production will rise to 110 million barrels per day, while the price of a barrel of oil remains in the current $100 to $125 per barrel range. Non-OPEC production has been in decline since 2004, but the EIA miraculously predicts a 15% increase in production over the next 25 years. OPEC production has been flat since 2005, but the EIA is confident their 50 year old oil fields will ramp up production by 25% in the next 25 years. Does the EIA consider whether OPEC even wants to increase production? It would appear that constrained supply and higher prices would be quite beneficial to the OPEC countries. And then of course there is the unconventional oil that is supposed to increase from 4 million barrels per day to 13 million barrels per day, a mere 325% increase with no upward impact on prices. These guys would make a BLS government drone blush with the utter ridiculousness of their predictions.

The picture below is an excellent representation of how the easy to access oil and gas of the earth have been tapped. They were close to the surface. The remaining oil and gas is deeper and trapped within shale and sand. The new technology for extracting gas from shale has concerns regarding whether fracking and disposal of waste water can be done safely, especially near highly populated areas. The relationship between fracking and earthquakes could also prove to be problematic. The wells also have rapid decline rates. Add a mile of ocean to the picture below and you have some really expensive to access oil and potential for disaster, as witnessed with the Deep Water Horizon.

The EIA projects natural gas supply to grow by 10% between now and 2035 due to a 300% increase in shale gas supply. It seems the EIA believes the fantasy of 8 Saudi Arabia’s in the Bakken formation of North Dakota and decades of gas within the Marcellus Shale. These fantasies have been peddled by the natural gas industry in order to get support for their fracking efforts. This false storyline is damaging to the long-term planning that should be taking place now to alleviate the energy scarcity that is our future. In 2006 the EIA reported the possibility of 500 billion barrels of oil in the Bakken formation, based on guesswork. The U.S. Geological Survey has since scaled this back ever so slightly to 3.65 billion barrels, which is six months of U.S. consumption. The deceptions peddled regarding Marcellus shale are also colliding with reality. The U.S. Geological Survey recently produced an estimate of Marcellus Shale resources, which will cause the EIA to reduce its estimate of shale gas reserves for the Marcellus Shale by 80%. The price of natural gas is currently $3.54 MMBtu, down from $13 a few years ago. Extracting natural gas from shale has high capital costs of land, drilling and completion. It is not economically feasible below $6 MMBtu.

Based on the known facts and a realistic view of the future, there will be less supply of oil and natural gas as time goes on. We can already see the impact of these facts today. Even though Europe and the U.S. are in recession, the price of oil continues to rise. The developing world continues to demand more oil and the supply is stagnant. Stunts like withdrawing oil from the Strategic Reserve are foolish and politically motivated. Is the world then running out of oil then? No, but any increase in future global oil production will be modestly incremental and production could be thrown off course by any number of possible events, from an Israeli attack on Iran to (another, but successful this time) al Qaida attack on Saudi Arabia’s Abqaiq oil refinery. Any forecast regarding future oil production and prices isn’t worth the paper it is written on unless consideration to wars, revolutions and terrorism are factored into the equation.

We Don’t Matter

Americans like to think we are the center of the universe. Those who propagate the misinformation about U.S. energy independence are clearly math challenged. The total proven oil reserves in the world total 1.4 trillion barrels and the United States has 22 billion barrels of that total, or 1.6% of the world’s oil. The U.S. burns 7 billion barrels per year, so we have enough oil to survive for three whole years. The U.S. consumes 22% of the world’s oil despite having 4.5% of the world’s population and less than 2% of the world’s oil. Do these facts lead you to the conclusion the United States will be exporting oil in the near future?

When you hear the pundits breathtakingly describe our vast natural gas resources you would think we are the dominant player in this market. Not quite. The United States has 4% of the world’s natural gas reserves. Predictably we consume 22% of the world’s natural gas. Russia controls 25% of the world’s natural gas reserves, with the Middle East countries controlling 40% of the world’s reserves. The pundits can hype our “vast” supplies of natural gas, but the facts clearly reveal it is nothing but hype.

The U.S. is consuming less oil than it was in 2005. U.S. consumption is not the crucial factor in determining the price of oil today and our consumption will matter even less in the future. Emerging market countries, led by China and India, will be the driving force in oil demand in the coming decades. According to the IEA, “Non-OECD [emerging markets] account for 90% of population growth, 70% of the increase in economic output and 90% of energy demand growth over the period from 2010 to 2035.”

This demand is being driven by the growth in vehicles in emerging markets. The U.S. market has reached a saturation point, but China, India and the rest of the world are just beginning their love affairs with the automobile. The accumulation of facts regarding both supply and demand should even convince the most brainless CNBC talking head that the price of oil will continue to rise. The 2008 peak price of $145 per barrel will not hold. The tried and true American method of ignoring problems until they reach crisis proportions will bite us in the ass once again.

Slippery Road Ahead

The concept of EROI is incomprehensible to the peak oil deniers. When Larry Kudlow or one of the other drill, drill, drill morons proclaims the vast amount of oil in North Dakota shale and in Alberta, Canada tar sands, they completely ignore the concept of EROI. Some estimates conclude there are 5 trillion barrels of oil left in the earth. But, only 1.4 trillion barrels are considered recoverable. This is because the other 3.6 trillion barrels would require the expenditure of more energy to retrieve than they can deliver. Therefore, it is not practical to extract. When oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. and about ten for one in Saudi Arabia.

The chart below clearly shows the sources of energy which have the highest energy return for energy invested. I don’t think I’ve heard Obama or the Republican candidates calling for a national investment in hydro-power even though it is hugely efficient. The dreams of the green energy crowd are shattered by the fact that biodiesel, ethanol and solar require as much energy to create as they produce. Tar sands and shale oil aren’t much more energy efficient. It’s too bad Obama and his minions hate dirty coal, because has the best return on energy invested among all the practical sources.

Worse than the peak oil deniers are those who pretend that oil isn’t really that important to our society. They declare that technology will save the day, when in reality technology can’t function without oil. Without plentiful cheap oil our technologically driven civilization crashes. We are addicted to oil. Americans consume petroleum products at a rate of three-and-a-half gallons of oil and more than 250 cubic feet of natural gas per day each. You might be interested in a partial list of products that require petroleum to be produced.

Solvents	Diesel fuel	Motor Oil	Bearing Grease
Ink	Floor Wax	Ballpoint Pens	Football Cleats
Upholstery	Sweaters	Boats	Insecticides
Bicycle Tires	Sports Car Bodies	Nail Polish	Fishing lures
Dresses	Tires	Golf Bags	Perfumes
Cassettes	Dishwasher parts	Tool Boxes	Shoe Polish
Motorcycle Helmet	Caulking	Petroleum Jelly	Transparent Tape
CD Player	Faucet Washers	Antiseptics	Clothesline
Curtains	Food Preservatives	Basketballs	Soap
Vitamin Capsules	Antihistamines	Purses	Shoes
Dashboards	Cortisone	Deodorant	Footballs
Putty	Dyes	Panty Hose	Refrigerant
Percolators	Life Jackets	Rubbing Alcohol	Linings
Skis	TV Cabinets	Shag Rugs	Electrician’s Tape
Tool Racks	Car Battery Cases	Epoxy	Paint
Mops	Slacks	Insect Repellent	Oil Filters
Umbrellas	Yarn	Fertilizers	Hair Coloring
Roofing	Toilet Seats	Fishing Rods	Lipstick
Denture Adhesive	Linoleum	Ice Cube Trays	Synthetic Rubber
Speakers	Plastic Wood	Electric Blankets	Glycerin
Tennis Rackets	Rubber Cement	Fishing Boots	Dice
Nylon Rope	Candles	Trash Bags	House Paint
Water Pipes	Hand Lotion	Roller Skates	Surf Boards
Shampoo	Wheels	Paint Rollers	Shower Curtains
Guitar Strings	Luggage	Aspirin	Safety Glasses
Antifreeze	Football Helmets	Awnings	Eyeglasses
Clothes	Toothbrushes	Ice Chests	Footballs
Combs	CD’s & DVD’s	Paint Brushes	Detergents
Vaporizers	Balloons	Sun Glasses	Tents
Heart Valves	Crayons	Parachutes	Telephones
Enamel	Pillows	Dishes	Cameras
Anesthetics	Artificial Turf	Artificial limbs	Bandages
Dentures	Model Cars	Folding Doors	Hair Curlers
Cold cream	Movie film	Soft Contact lenses	Drinking Cups
Fan Belts	Car Enamel	Shaving Cream	Ammonia
Refrigerators	Golf Balls	Toothpaste	Gasoline

The propaganda blared at the impressionable willfully ignorant American public has worked wonders. The vast majority of Americans have no clue they have entered a world of energy scarcity, a world where the average person is poorer and barely able to afford the basic necessities of life. This is borne out in the vehicles sales statistics reported every month. There have been 10.5 million passenger vehicles sold through the first 10 months of 2011. In addition to the fact they are “purchased” using 95% debt and financed over seven years, the vast majority are low mileage vehicles getting less than 20 mpg. Only 1.8 million small energy efficient vehicles have been sold versus 6.1 million SUVs, pickup trucks and large luxury automobiles. Americans have the freedom to buy any vehicle they choose. They also have the freedom to not think and ignore the facts about the certainty of higher prices at the pump. By choosing a 20 mpg vehicle over a 40 mpg vehicle, they’ve sealed their fate. How could the average soccer mom get by without a Yukon or Excursion to shuttle Biff and Buffy to their games? Have you ever tried to navigate a soccer field parking lot in a hybrid? The horror!

The American public has been lulled back into a sense of security as gas prices have receded from $4.00 a gallon back to $3.40 a gallon. This lull will be short lived. Oil prices have surged by 15% in the last two months, even as the world economy heads into recession. The link between high oil prices and economic growth are undeniable, even though the deceitful pundits on CNBC will tell you otherwise. Ten out of eleven recessions since World War II were associated with oil price spikes. Gail Tverberg sums up the dilemma of energy scarcity for the average American:

“High-priced oil tends to choke economies because high oil prices are associated with high food prices (because oil products are used in food growing and transport), and people’s salaries do not rise to offset this rise in food and oil prices. People have to eat and to commute to their jobs, so they cut back on other expenditures. This leads to recession. Recession leads to lower oil consumption, since people without jobs can’t buy very much of anything, oil products included. In some sense, the reduction in oil extraction is due to reduced demand, because citizens cannot afford the high-priced oil that is available.”

But don’t worry. The rising oil and food prices will only impact the 99% in the U.S. and the poorest dregs across the globe that spend 70% of their income on food. The 1% will be just fine as they will bet on higher oil prices, therefore further enriching themselves while the peasants starve. The market for caviar, champagne, NYC penthouses, and summer mansions in the Hamptons will remain robust.

There is no escape from the ravages of higher priced oil. There is plenty of oil left in the ground. But, the remaining oil is difficult, slow and expensive to extract. Oil prices will rise because they have to. Without higher prices, who would make the huge capital investment required to extract the remaining oil? Once oil prices reach the $120 to $150 per barrel range our economy chokes and heads into recession. We are trapped in an endless feedback loop of doom. The false storyline of renewable energy saving the day is put to rest by Gail Tverberg:

“Renewables such as wind, solar PV, cellulosic ethanol, and biogas could more accurately be called “fossil fuel extenders” because they cannot exist apart from fossil fuels. Fossil fuels are required to make wind turbines and other devices, to transport the equipment, to make needed repairs, and to maintain the transport and electrical systems used by these fuels (such as maintaining transmission lines, running-back up power plants, and paving roads). If we lose fossil fuels, we can expect to lose the use of renewables, with a few exceptions, such as trees cut down locally, and burned for heat, and solar thermal used to heat hot water in containers on roofs.”

Predictably, the politicians and intellectual elite do the exact opposite of what needs to be done. We need to prepare our society to become more local. Without cheap plentiful oil our transportation system breaks down. Our 3.9 million miles of road networks will become a monument to stupidity as Obama and Congress want to spend hundreds of billions on road infrastructure that will slowly become obsolete. The crumbling infrastructure is already the result of government failure, as the money that should have been spent maintaining our roads, bridges and water systems was spent on train museums, turtle crossings, teaching South African men how to wash their genitalia, studies on the mating habits of ferrets, and thousands of other worthless Keynesian pork programs. If our society acted in a far sighted manner, we would be creating communities that could sustain themselves with local produce, local merchants, bike paths, walkable destinations, local light rail commuting, and local energy sources. The most logical energy source for the U.S. in an oil scarce scenario is electricity, since we have a substantial supply of coal and natural gas for the foreseeable future and the ability to build small nuclear power plants. The Fukushima disaster is likely to kill nuclear as an option until it is too late. The electrical grid should be the number one priority of our leaders, as it would be our only hope in an oil scarce world. Instead, our leaders will plow borrowed money into ethanol, solar, and shale oil drilling, guaranteeing a disastrous scenario for our country.

The United States is a country built upon the four C’s: Crude, Cars, Credit, and Consumption. They are intertwined and can’t exist without crude as the crucial ingredient. As the amount of crude available declines and the price rises, the other three C’s will breakdown. Our warped consumer driven economy collapses without the input of cheap plentiful oil. Those at the top levels of government realize this fact. It is not a coincidence that the War on Terror is the current cover story to keep our troops in the Middle East. It is not a coincidence the uncooperative rulers (Hussein, Gaddafi) of the countries with the 5^th and 9^th largest oil reserves on the planet have been dispatched. It is not a coincidence the saber rattling grows louder regarding the Iranian regime, as they sit atop 155 billion barrels of oil, the 4^th largest reserves in the world. It should also be noted the troops leaving Iraq immediately began occupying Kuwait, owner of the 6^th largest oil reserves on the planet. Oil under the South China Sea and in the arctic is being hotly pursued by the major world players. China and Russia are supporting Iran in their showdown with Israel and the U.S. As the world depletes the remaining oil, conflict and war are inevitable. The term Energy Independence will carry a different meaning than the one spouted by mindless politicians as the oil runs low.

And as things fell apart
Nobody paid much attention

Nothing but Flowers – The Talking Heads