Bill Cara’s Blog for Aug 9, 2010 [See post-close report]

At least that I've noticed, his calls on gold have been way wrong the past few months, along with most other newsletter writers.

I have given up reading his reports because they are negatively affecting my trades as a result, ie causing me to doubt and not have the tenacity to hold when I should have.

LOL, if only he were 100% wrong, I could read them and trade against them...

http://tinyurl.com/2asq3c9
"...bringing its total request since it was taken over by the government two years ago to more than $64 billion"
It seems this will never end. Ever more billions and billions of additional taxpayer debt, all to keep Freddie and Fannie bumping and scraping along just above the accounting definition of insolvency; and brought to us by the same red & blue state politicians who want us to vote them back into office based upon their record of service. We need more choices beyond red and blue.

Just went back to an old Hussman essay about all the cash CNBC and others expect to move the market.

http://hussmanfunds.com/wmc/wmc060710.htm

July 10, 2006
There's No Such Thing as Idle Cash on the Sidelines

from 7/22...

"Gold is headed for a test of key support at $1170. Failure would warn of another test of primary support at $1060. Recovery above resistance at $1220 is less likely, but would indicate an advance to $1380*; breakout above $1260 would confirm. Large bearish divergence on Twiggs Momentum, however, warns of reversal to a primary down-trend."

But if you look more closely, what you really have is an IOU. It might be a very liquid one, like a money market fund that holds T-bills and commercial paper, but it's still an IOU. See, your “cash on the sidelines” isn't sitting there idle, waiting to be put to work. The fact is that it has already been put to work.

And you'd better pray that it's not invested in Lehman-esque CP as in the case of Reserve Primary, because it might turn out to be not that liquid.

ALOHA!!

Over at The Automatic Earth ... The deflation and inflation debate rages on!

LINK: http://tinyurl.com/29cbf72

Read both sides and notice they both end in a monetary collapse. So is preparing oneself for deflation better than preparing for inflation or should one skip over both and just prepare for a monetary collapse, where infinite liabilities and worthless money is the end result? Because it is the tainted and diseased money that is the death of us all. It is like debating whether you will die from a heart attack or cancer. Should you prepare by buying chemo meds or should you prepare by buying a defibrillator? But if you know death is imminent no matter how it is achieved then why not just prepare for death?

The deflationist are convinced that government and the US FED cannot print their way out of deflation. They will point to the Great Depression of the 1930s, but there were no computers and mouse clicks then. The entire money game has been elevated to Trillions now and I see no reason it cannot go to quadrillions in short order. Quadrillions can happen as fast as Trillions. If the US Treasury and the US FED wanted to they could do quadrillions tomorrow and simply buy everybody's debt, not just the banks bad loans. If as Stoneleigh says in the article anything can happen then why not that? The Weimar experiment that Germany went through was only limited by a "real" printing press that ran out of "real" paper and "real" ink. In the modern era of money creation no paper or ink is required and above all not even a real printing press is needed.

Then I cannot help but notice what is absent from these debates. It is the US Treasury Daily Statements. Its shown in black and white in a pdf file every day whereby as I have pointed out before the US Treasury does a QE every month in withdrawals from their Federal Reserve Account. Where exactly is over $1TRIL per month going to? Well some is going to pay redemptions on US Debt and some is going to pay the myriad of bills the US government has so that the two party monopoly can keep the governments doors open and their power intact around the globe. There are probably 30 or 40 line items in the Daily Statement that list where those funds go. The top four are Social Security, Medicare, Medicaid and Defense. Coming up close behind is Unemployment Benefits and Welfare and Food Stamps. At over $1TRIL per month the US Treasury is already printing the entire US GDP every year. Yet neither the deflationist or inflationist ever mention that as they will only disclose "deficits" and "ratios". My question is, if the US Treasury is already printing the entire wealth(GDP)of the USA every year then why is it impossible for them to print twice the GDP? So with the combination of modern technology and computers and the propensity to accumulate ever higher levels(each week $110BIL+) of government debt, into the Trillions now, then where is the evidence it is impossible for government to up the money anti?

I do agree the bond market is an obstacle to debt issuance in the form of rising rates, as in debt service, but at some point the US Treasury could go around the bond market and put digital numbers in every citizens bank account at every bank in America over night. In truth the US Treasury is already doing that via Unemployment checks, welfare, food stamps, Medicare, Social Security, etc. After all it is the US citizens who hold the voting power not the bond vigilantes. But in either instance the value of a USD would be ruined. If bond vigilantes demand higher rates then that could cause a squeeze on debt service which means redemptions would be either limited or stopped totally at some point in time. You do remember the hedge funds and their "redemptions", X amount of dollars and only once a month? Remember those days? What would happen to the C WORD under such circumstances? The USD would take a fatal blow. Whats the point in buying US Debt if you cannot redeem it whenever you want at full value? In such a circumstance why would a USD be a safe haven? While Stoneleigh believes these scenarios could take years, I say under the right circumstances it could be less than a week. Now Stoneleigh will call a "debt default" a classic sign of deflation. I prefer the term "monetary collapse" because if you connect the dots its the same thing. A USD is a debt derivative so if US Debt defaults then the USD does. Really money is only backed by "faith and credit" or as I call it the "human condition", because you are trusting a bunch of political and banking egos to preserve the function of money, which is a medium of exchange and a store of value. Like any human interaction the key end user word that controls the success of any human transaction is "trust", which cannot exist without "confidence". If you do not have the confidence that your wife will be monogamous then how can you trust her? If you do not have confidence that your money will be worth anything in ten years then how can you trust not only the money but the banks? Keen emphasizes bank trust.

Then Stoneleigh goes into the old standby of cash and the USD reflex safe haven whereby everyone will be clamoring for a USD, yet in the next breath she insists that following the crowd is the exact opposite of what you want to do since that is what the financial elites want you to do. So why is it the USD safe haven gets a pass from Stoneleigh yet the complete opposite and the least crowded trade would be gold and silver, Constitutional money? Even now with the POG over $1200 I guarantee you there is less a crowd in gold than there is in US Treasuries and the USD. Compared to the USD ... what crowd? She suggest playing a monetary game of ping-pong, whereby you rush into dollars(cash) and then rush into hard assets at just the perfect time. Hummmm??? Been there ... done that ... no thanks! You figure it out with your crystal ball Stoneleigh ...

Both of them(Stoneleigh and Williams) talk about stocking up on canned goods for a few months. Aside from monetary collapse, errr, I mean "debt defaults" isn't having a spare food supply just a good idea no matter when? I don't know ask a Katrina survivor or Loma Preita earthquake survivor about that. I by-pass that whole strategy and I say live where the food is year round, Summer and Winter. Then all you have to do is stock up on the luxuries not the necessities, because the necessities are growing and living and breathing all around you every day here in "rural" Hawaii. My protein runs through my pasture every day and it swims in the ocean a mile and half from where I live every nanosecond. My starch and carbs and sugar and vitamins and minerals grow all around me, some only ten feet away, a lot closer than my nearest SafeWay. And water? It falls from the sky practically every single day. All I need is a 5gal bucket and I say ... "God, filler' up!"

Once again I just do not think the BIG PICTURE is being explained clear enough. How can you leave out the US Treasury numbers and ignore over $12TRIL annually? Both George Bush and Obama have created debt in the Trillions each and every year and they are withdrawing over $12TRIL per year from the US Treasury account over at the Federal Reserve. The money is being printed and spent and lent. Who cares what the banks did with their paltry $2TRIL from the US FED. Look what the US Treasury is doing with over $12TRIL! Right now the Treasury is in QE11 for FY 2010. Waiting for Ben's QE2 is like waiting for Godot.

All I am trying to do is match my reality in my daily life with what the monetary economists are saying and predicting my reality is or will be. So far my reality is that I can barely keep up with rising prices of everything from gasoline to utilities and food to healthcare. Stoneleigh says we need to focus on not rising consumer prices but money supply and house prices and how debt is contracting and thereby the economy is contracting and thereby that is the classic definition of deflation and thereby the Great Depression 2 is on us. Come on! BS! If this is the Great Depression 2 then tell my bills that! This will go down as the most expensive Great Depression in history! In fact I'd love to see my monthly bills really "feel" this Great Depression 2 for once and then, in a loving way, really reflect it back to me in the form of lower ones ... much, much, much lower ones! I just mailed off a check for $949.88USD to HMSA for my wife and I health insurance for the month of August. When we left California in 2002 our house payment was $1225USD per month. At this rate next year my monthly health insurance will be a house payment! DisneyWorld just raised their price for a Day Pass to $82 from $79. I have a long list of food and business products I use that go up every few months, especially cardboard. My cardboard prices were even going up when lumber and pulp futures were going down. FedEx is always raising fuel surcharges as well. Now tell me again why I should focus on "money supply" and contracting credit in this Great Depression 2? The credit contracting has been going on for over two years, soon to be three. Now when will consumer price contraction start? With this decimated real estate market and this huge credit contraction when will I be able to buy a house in Laguna Beach, California with an ocean view for $80,000USD, like the 1970s?

I am not saying that deflation could not happen and in fact some prices for certain assets like real estate have come down and you can find others, but all I am trying to communicate are flaws I see in "logic", for lack of a better word. I do not believe in black and white, because the World is way too complex now for that sort of thinking. I think there are truths in almost everything an "expert" has to say, but as an individual we make our own choices on how to allocate what little capital we have left after our government squeezes us dry from taxes and regulations. My number one focus in my life has not been "money supply". That might work if I was a Princeton professor of Economics getting paid $200,000 a year to teach the same mindless dribble year after year to the same robots, but I am not an ivy league professor, I am a small business owner, farmer and investor and average law abiding citizen. So I am at a huge disadvantage in the hierarchy of the elite political and banking monopolies. Unfortunately I cannot hire a maid to go do my grocery shopping like Stoneleigh apparently does, because to me the prices at the grocery store and gas station are all I ever focus on in my little reality here. In fact daily prices are all I have ever focused on for my entire life ... that and how to pay them! I wonder if Stoneleigh knows what a gallon of milk costs. George Bush didn't know ... I seriously doubt Obama does either ... The White House Chef probably knows!

So the VIX today might be telling us something. Its up almost 4% on a very sleepy trading session. My guess is, traders are unwilling to put on any risky trades in advance of the Fed's possible QE announcement. Perhaps the trade folks are putting on are straddles, betting on a big move in either direction.

I have been wondering how likely it is that the 2009-redo QE trade will be easy money. Someone I know really liked to say that the market likes to disappoint the largest number of traders, and it seems like a bunch of traders have piled into the QE-will-make-us-rich trade in advance of this announcement.

From where I sit, the Fed has spent entirely too much time talking about QE - perhaps their whole goal was to talk down the dollar, talk up bonds, and the equity market without having to do anything. If so, they've been extraordinarily successful. We've added 100+ SPX points, the dollar has dropped to 80, while bonds were nudged even lower than the July 1 lows. How much better an outcome can a central banker want from absolutely no action at all.

Is it possible that actual Fed actions could do any more? I'm beginning to wonder.

"Population sustainability and the Ponzi demography"
http://bit.ly/azfMpM

"Prosperity without growth?"
http://bit.ly/cnMvjT

Matt Simmons has died. His 'Twighlight in the Desert' regarding history and production puzzle of Saudi mega oilfields should be a must read for all critical thinkers from high school on up. His recent comments regarding the Deep Water Horizon spill raised my eyebrow but perhaps it was his last hurrah.

May he R.I.P.

http://www.businessinsider.com/matt-simmons-dies-2...

Dr, I'm fine with there being multiple if-then-else scenarios, as long as the criteria for when they are satisfied or not is CLEAR.

"Gold is headed for a test of key support at $1170. Failure would warn of another test of primary support at $1060."

Did it fail key support at $1170? How would "failure" be defined?

I think Bill is saying he saw it that it DID NOT fail $1170 support as I read his post, but my impression was that it did fail $1170 and therefore the test at $1060 was to be expected, so I need to understand the definition, because that was the post I read that influenced my decisions (shouldn't say caused) me to take big losses and small short term gains on the metal ETF and mining shares I bought when gold was in that panic (bought at $1168 to $1163). They would have been huge gains had I held on.

"we had a classic test and failure today, but w/ volume low on both ups and downs its tough to put as much faith in this approach. though my own inclination based on the ongoing decline of the shares is that gold may need more time to work out its cup/handle potential failure before anything happens."

How about it falls just ahead of Tuesday's Fed meeting as bullion banks put the hammer down on the Comex open? Let put that in our cup and pick up the handle and drink it.

From Dave's GLD Trader's Almanac:

Dr Cosa's observations are borne out by my analysis of GLD's price action over 3 periods of time: 2010, 2008-present, 2004-present. Over the 3 time periods I examined, GLD got ALL of its gains from gap up opens in NY. (I subtracted gap downs from gap ups to get total movement due to gaps). During the day on average GLD loses more than it gains over all time periods.

Note that during these 3 time periods, GLD was in an uptrend, so it really amazed me that in aggregate EVEN DURING AN UPTREND GLD managed to lose more points than it gained during the trading day.

Just for fun I checked the one bad period 2008-July thru 2008-Nov, and GLD broke even on the gap up/down moves, and lost ALL of its value during the trading day.

So if you're going to buy gold, buy it at end of day, not at the beginning. And if you're going to sell, sell at the beginning, not at the end of the day. And recently (during 2010) GLD has lost money on most OPEX fridays and on every monday following OPEX as well. (This last stat was not true for the other time periods)

These two article disclose the fact that the U.S. State Department through the United States Agency for International Development will provide millions of U.S.taxpayer dollars to train foreign workers to work in American outsourced factories. This program is in effect in South Asia and will be extended now to Armenia.

I find this information very hard to understand. What do you suppose unemployed Americans feel about this?

http://tinyurl.com/2cbjfgv

http://tinyurl.com/35tfsvr

Twiggs is not always right. I heard once that sometimes even Bill is mistaken. :) But I read them because I thought their purpose was to make us think for ourselves. "Teach a man to fish...."
JMHO

The decline of HP is sad. Remember when the CEO had the board spied upon? and then the failed Ms. Fiorina left with a golden handshake?

Mark was involved in all that, and then took his (and his cronies') compensation WAY north. Lately, he gave himself a 31% raise, even as he enforced a 5% cut on HP's troops:

http://www.thestreet.com/story/10830261/hurds-exce...

I wrote HP to say I'll never hold their stocks, nor buy their products again.
The "HP Way" - spirit behind Silicon Valley is GONE ...

I think the company played up the sexual harassment story so the media sheep would take that as the headline - which they did. But the main story, I suspect, is that he stopped performing as CEO about the time he took his pay through the roof.

I haven't backtested it, but my guess is, you could buy GLD at the close, and sold at the open, you'd increase your gains (assuming your trading costs didn't start to dominate).

One interesting observation - the gains from gap opens became steadily more noticeable as the years progressed. I wonder why that was? (Come on guys, put on those tinfoil hats and let's hear some serious conspiracies!)

2005: 6.9 points from gap ups, 3 points from intraday moves
2007: 15.5 points from gap ups, 4,9 points from intraday moves
2009: 19.1 points from gap ups, 2 points from intraday moves
2010: 10.3 points from gap ups, -2.7 points from intraday moves

Can move more if June S&P highs goes here at 1130.

Hey Dr. Strange and Crew...

I've been keeping my eyes on the gulf and my mouth shut... There is a whole lot of misinformation, disinformation, confusion, emotion and chaos around this issue. It is hard for me to comment knowledgeably in this environment, so I don't. I can attest to the fact that Researchers and Scientists have been approached with bribes and blood monies to bury or spin certain truths and that the constitutional rights of american citizens continue to be forcibly violated by response authorities. And I truly believe that there are people on the coast whose health and wellbing continue to be placed in needless jeopardy because of these crimes.

With regard to Matt Simmons, he was in a unique position to get a lot closer to certain truthes surrounding this catastrophe than most any of the rest of us in the public, so he represented an invested source of clarity. Losing his voice in this issue was a tragedy in itself. While disconcerting to me, his passing (drowning in a hot tub) is both convenient and fortuitous to those whom he was shining light upon. Here is a link to his bio and his last public radio interview (for those who don't understand my above comments, listening to this interview will help):

http://tinyurl.com/34djkhm

The public still does not have anything resembling the truth in these matters.

Happy Trading

"My thesis: Deflation in things you want but don't need and inflation in energy and food. Einstein's formula E=mc2 was profound in its simplicity."

It is exactly what I am experiencing here.

Another thing which will continue to inflate is taxes. Both open and hidden taxes are being creatively increased. Locally we are about to get a "special tax" on certain sections of town. The Gov. is proposing a state income tax increase. And, of course, we are all getting the huge ones that Kaimu points out.

JimG,

"I find this information very hard to understand. What do you suppose unemployed Americans feel about this?"

The reaction to this by the unemployed is the easy part. Trouble is Obama & Co. have already pacified large segments of the country (auto union, gov. unions, illegals) with outright bribes or promises of those to come.

I see The U.S. Agency for International Development as a One-World movement which fits perfectly with Obama's speeches and bowing to foreigners since Day One.

We have no national sovereignty as far as he is concerned. I nearly puke every time I hear him speak or read the media accolades of his "successes" like TARP and GM.

We are paying in advance for our own economic funeral with such a program.

'Locally we are about to get a "special tax" on certain sections of town.'

Grym- No kidding.

Embedded in the following article from the Chronicle are proposals to tax commuters/visitors entering and exiting San Francisco during morning/evening rush hour:

http://tinyurl.com/2b5mqow

'Commuter fee: The San Francisco County Transportation Authority is shopping the idea of a toll for motorists coming into downtown - or even the city itself.

In a series of community meetings, the authority has presented three ideas for cutting down rush-hour traffic while raking in $80 million a year:

-- Plan 1: A $3 weekday toll for those entering and leaving the city via the Peninsula during morning and evening rush hours.

-- Plan 2: A $3 toll for anyone going into or leaving downtown during the morning and evening rush hours - with a $1 discount for bridge crossers, and half-price for residents who live within the area bounded roughly by the bay, Laguna Street and 15th Street.

-- Plan 3: A $6 toll for drivers leaving downtown during weekday evening rush hour - again, with a buck off for bridge commuters and half off for residents within the bounded area.

The toll could bring the daily commute fare for drivers coming over bridges into downtown to $10 or $11.

"Why don't they just hand out a 'Don't come to San Francisco' sign?" North Beach Merchants Association VP Kathleen Dooley said after attending a community meeting on the plan.

There seem to be additional forces at play in all of this that Matt seems not to have been aware.... I personally know of at least 2 groups utilizing non-traditional (to say the least) technologies in remediation of this catastrophe. Perhaps these alternative methodologies have truly had a beneficial impact in the breakdown of the oil. I can't say. If this were the case, however, we might expect seemingly miraculous results that would not be admitted or addressed by the powers that be... More reasons for clandestine operation without public scrutiny or oversight that might explain some loose ends.

I continue to pray that we have truly seen the worst of this catastrophe. I just don't know. I do know that I will continue to avoid consuming foods from these environs.

I have been an industrial water treatment plant operator for 20 years, mostly metals, lead, zinc, and nickel. My experience has taught me to raise the oil to the surface with polymers and skim it off the top (oil is lighter than water). The hydrogen sulfide odors on shore are because anaerobes are doing their job underneath the surface of the ocean. The bottom of the ocean is where the oil is or at least a lot of it. Anaerobes work in a non oxygen environment, they produce acid and hydrogen sulfide. This will kill you, a film builds up over the anaerobes and they don't die they just pollute. For the government to tell the public that the oil is gone is absolutely a LIE, to say the ocean life is safe to eat is another lie.
The test they used for the dispersant's harmful effects on ocean life was a smell test (as see on TV). This is so improper, so unprofessional, so unscientific these guys should be force to eat shrimp every day for a month, then monitor them for 5 years, if they live that long. This is an insult to everybody in the country. This guy on TV saying that the oil was eaten by aerobe bugs (oxygen eating bugs) is complete crap. If the aerobes ate 206 million gallons of oil where are the aerobe bugs? These bugs should be fat and everywhere, on the surface, in the middle, and on the bottom of the ocean. I'm not at the GOM or even close, so this is just a generalization of basic water treatment, I think the government is trying to make us believe that 2+2=5.

anyone following APWR? Sure looks cheap to me, especially with oil continuing to go up.

bigmother,

Yes, my criticism of Obama is not by any means limited to his administration — it has been a long time, systematic destruction of our economy. Favoring anyone domestic or foreign who can make money for the elitists in control of powerful committees across the whole range of government.

I did graphic design for a large variety of local manufacturing companies from the early 1960s until they were virtually all gone in 2006. The move to offshore began here in the 1980s and snowballed with the passing of NAFTA. Bush the First set it up and Clinton shoved it through.

I'm sure this has always been so and remember reading George Washington was plagued with profiteers when his men were freezing their feet at Valley Forge due to a lack of shoes.

The internet has made it far easier to do on a much larger scale.

I have been saying this for a few months. I work in the oil industry and typically, when we don't know what will happen we use analogs. A lot like what Bill does when he looks back at tends to compare to today's events. In the case of Macando, may he rest in peace, but Matt Simmons was way out of his league. He literally had no clue, a lot like his twilight in the desert peak oil theory. The truth is that the peak of easy to extract oil might be dead, but oil (hydrocarbon) has a long life. Heck, look at the unconventional gas in the US. More is being found everyday. So much so, that the price of NG has nearly collapsed. In fact, we could switch the entire auto fleet to CNG and almost be self sufficient at least for a decade or so, probably longer. Anyway back to my point. See the attached article by Arthur Berman, although I do not agree with his general assessment of shale gas, his Haynesville assessment is pretty spot on, but not because it is a bad play, but it is being developed completely wrong, but that is a technical argument much too deep for this blog.

http://petroleumtruthreport.blogspot.com/2010/06/e...

Remember he figured this out in June. Pretty close to the real amounts.

Now let's look at the fact that reports are out now wondering where all the oil went. The analog that I have commented on is the Ixtoc oil spill in 1979 by Pemex. Pretty similar, but it is a good analog. A bad analog is the Exxon Valdez, why environmental temperature, therefore less bacterial activity.

http://en.wikipedia.org/wiki/Ixtoc_I_oil_spill

Anyway, not much of an effect, primarilly due to the fact that the temperatures are warm and microbiological activity is high, resulting in a lot of food for micororganisms.

Next, I look at the turtles and brown pelican population. Currently these two species are on the endangered list. Why? Well it is because of commercial fishing, not oil spills. I ask should we stop commercial fishing?

Next, we look at the distribution of income from the BP fund to people losing money. One of the main reasons that money has not been disbursed and people are hurting, is because they are distributing the money based upon tax returns. Guess what, a lot of small businesses take advantage of being a small business and write a lot of stuff off. Not saying it is wrong, but if you are expecting a handout, remember all the stuff you own that is really owned by the business you run and think of that as your handout.

Next, do we stop flying all planes when there is a crash? Why have we stopped drilling in the Gulf?

Finally OIL IS NATURAL there are millions of gallons/barrels that seep naturally each and every year into the environment. Ancient Indians used it to coat their canoes to keep them waterproof. It has been shown that in the area of Mesopotamia they used oil/tar lamps. Below is a study on natural seepage in the Gulf of Mexico. Also, for anybody who lives near Santa Barbara you know that the oil in the water is natural seepage and here the Indians used that oil to help them live.

http://petroleumtruthreport.blogspot.com/search?up...

Anyway, look at the material. Below is a recap of my rant.

1. Oil is Natural
2. Endangered Species - What is the real reason they are endangered
3. Planes still fly after a crash
4. Evidence from Ixtoc was basically gone after a year
5. Oil has been "seeping" for Eons
6. Oil is Natural

Hi Team, wild times, eh ! Yes, keep ' apwr ' on your screen... Waiting to see if it can` be taken back toward $ 7.90 ish on low volume.. If it breaks $ 9.00, i imagine $ 11.50 ( s`hades of AONE ).

http://www.huffingtonpost.com/adam-green/breaking-...

ez_money,
I agree with your points on the spill being over-hyped. I found it difficult to deal with the ignorance of various media talking heads whose producers should have at least given them a mini-course in drilling basics. I find it sad that in North America we use more energy per capita than anywhere else in the world, and yet the general population remains ignorant of the basics of energy production and distribution, on which their lifestyles are entirely dependent.

However, I have a different take than you on some of your 6 points.

"1. Oil is Natural" So are volcanoes, earthquakes, floods, tornados, fires, and trees falling in the forest. I have no desire to have close or prolonged exposure to any of those natural events.

"2. Endangered Species - What is the real reason they are endangered" You may be right here. I also have seen no similar great outrage about the dead zone from fertilizer run-off (an ongoing event), or habitat destroyed for housing, so I suspect there is a bit of opportunism here to get some money from someone with deep pockets. "Class action lawsuit" are the first words kids learn after "Mama" and "Dada".

"3. Planes still fly after a crash" I don't agree here. Planes are routinely grounded after an unexplained crash, but only the model involved in the crash until the cause is determined. Here the model grounded was the deepwater driller. Same thing.

"4. Evidence from Ixtoc was basically gone after a year" True, but Ixtoc was a shallow water well. The oil was essentially at the surface, compared to Macondo, much easier to deal with.

"5. Oil has been "seeping" for Eons" True. But the relevant word is "seeping". Bacteria are present at the seeps and while they don't get it all, they tend to take care of much of the oil escaping. That is not at all similar to large volumes spewing out over a short period of time at a blowout.

"6. Oil is Natural" As in the La Brea tarpits, killing animals for tens of thousands of years. "Natural" and "non-hazardous" are not synonyms.

Don't get me wrong. I have respect for those involved in energy production. Everyone should have to work for a month as an entry level Labourer/Roughneck/Roustabout somewhere in resource extraction, processing, or distribution before being given a driver's license. I don't care whether it's hard rock mining, pulling calves in a February blizzard, a drilling rig, a logging camp, commercial fishing, whatever. Maybe then some of the public criticism would be based on research and facts, not some TV talking head's inane nattering.

ez-money,

God bless you son. There are so many whack jobs in the world with their own agendas that it is truely refreshing to read you comments and assessments with which I whole heartedly agree.

Matt was a really good investment banker for the oil industry. I've recommended his book to others with the caveat that the premise should have been 'peak oil-------at a price!' It will be interesting to see his cause of death. His hysteria in recent times may well have been medical but I can only speculate. Megalomania evinces itself slowly in latter life.

Your Ixtoc analogy is compelling to say the least and we all know that the Santa Barbara seepage could be controlled and produced except for the politics in California.

I suspect that deep water drilling will commence again but with a concominant relief well at 75% or so. Perhaps the rig operators are in store for a 2-fer or at least a one and a half-fer.

Thanks again for your breath of fresh air. I've found that most conspiracy theorists are simply well meaning people searching for structure in a chaotic world and not finding an easy answer assume that there must be some great evil menace. The evil menace is usually incompetince of a higher order. I just hope it ain't viral and spreads...

One question and a couple of points, did you look at any of the links?

As for planes being grounded, all of the deepwater rigs were chased out of the gulf, not just the ones similar to the deepwater horizon (of which there are 2-3), nor just the wells being currently drilled by BP, so my analogy is valid. Imagine if there was a crash at an airport and all of the planes were grounded, that is what happened.

Yes, similar amounts of oil seep into the gulf and Santa Barbara channel as what spilled out of Macando. In Santa Barbara, Arco put a collection vessell over the largest seep and it became the 4th largest producing gas field in California during operation. It was less than 1 mile off the coast, this happened in the 80's-90's. This is "seeping" oil, and it is natural. Also, I would argue that if we did not have earthquakes, volcanoes, floods etc, we would not have Hawaii, California, Yellowstone National Park, or nearly any true forrests. They are all natural and need to happen. None would want it in our backyard, but without these events I believe the world would not be as nice as it is.

Also, Oil is Natural, just like, Hydrogen Sulphide and Uranium. We build engineered system to deal/take advantage of these hazards, sometimes these engineered systems are poorly engineered. They are made by humans. As I always say, I can garauntee one way to never have an oil accident again, don't drill, but then think of the consequences.

I appreciate your respect for my profession.

My point is and I think you agree, that

Oh don't tell me we have someone with actual experience here. Awesome.

So, ez_money, tell me. What's the per-barrel cost of the unconventional reservoirs that you typically deal with? And perhaps as important, what's the flow rate compared to the rate from the regular, easy to extract reservoirs? Lastly, what's the total size of the resource (US) from these these types of reservoirs?

* cost
* flow rate
* total resource size

From this, we can get an idea of what additional production (mbpd) we're able to realize from your unconventional production. Its great that the oil is there, but if we can't get at it quickly, and/or most of it is not economical, then it might as well not exist. But since I'm not the expert here, I'm asking you!

Being the evil synic that I am, it occured to me that Hurd's departure may have been orchestrated by the board. Such a mild peccadillo with with an aging cutie defies logic if he was truely their wunderkind.

To my mind, the guy was a serial stalker of purchased performance ala non-honest accounting or at least schemed accounting principles which allowed him to make his nut and thus his pay. Another example of pay for semi honest perfidy. Hell, the FASB writes tomes on how to beat their own system.

Owners of HP may want to send a bouquet and note saying 'Thanks Jody.'

S&P -5.40 / -0.48%
Level 1,120.20
Fair Value 1,125.03
Difference -4.83
Nasdaq -7.25 / -0.38%
Level 1,906.50
Fair Value 1,914.14
Difference -7.64
Dow -44.00 / -0.41%
Level 10,622.00

and now, the dow is down 75 pts. Is it all about China ?

S&P -6.30 / -0.56%
Level 1,119.30
Fair Value 1,125.03
Difference -5.73
Nasdaq -12.75 / -0.67%
Level 1,901.00
Fair Value 1,914.14
Difference -13.14
Dow -70.00 / -0.66%
Level 10,596.00

Gap down day. Could be good.

There's a data issue with WSJ's market site. The European summary shows solid green but a look at STOXX Europe 600 Index shows solid red in the 1 minute time frame. Yahoo shows FTSE, DAX and CAC solid red. The 2:30am Asia summary attached earlier appears to be correct, judging from Shanghai composite checked elsewhere. I don't think it is correct now. sorry.

http://online.wsj.com/mdc/public/page/mdc_internat...

http://www.sse.com.cn/sseportal/en_us/ps/home.shtml

Good morning.

I'm back from GuitarLand. Hope you people didn't take all the money out of the markets while I was gone. This means you, Vad. ;^)

BBY - Best Buy downgraded to Neutral from Buy at Goldman.

PG - Upgraded to Buy @ Argus. Target $66

VALE - PT lifted from $36 to $38 @ Canaccord Genuity. Buy

WFMI - Whole Foods upgraded to Buy from Neutral at UBS citing valuation. Target remains $45.

WFMI - Upgraded to Buy @ Canaccord Genuity. PT lifted from $43 to $47

I've been following the interchange on the spill and one thing comes through to me...

We who are not experts, not on the scene and are subjected to 24/7 information and disinformation (PC for lies) really have no way of judging the situation.

There are those who have agendas on both sides of the issue who are working full time on spinning.

I for one have zero confidence in the government (either party) the industry (any company) or any form of news delivery (including internet).

I am sick about what is being done to my country by so many greedy, self centered people.

The sale of our jobs, the lack of border and port security, the removal of market and accounting rules, the idea that the US is no better than those who seek to destroy our values and freedoms and worst of all — that so many insiders are participating in our destruction.