The Oil Drum: Europe

Despite the first rejection of the Paulson Plan, the effort is ongoing in Washington to push through a plan that is likely to be substantially similar to the first one (as far as I can tell, the only changes will be tax cuts and the inclusion of the renewable energy bill items). Given the overwhelming pressure to "do something", and despite warnings that we are being rushed for no reason into a terrible plan, it is rather unlikely that the final version of the plan is going to be very satisfactory. In any case, the following will hold true irrespective of the outcome of the Paulson Plan.

(Note: This was written for the European Tribune this week-end, ie before the rejection of the plan by Congress, and before the most recent bank bailouts, but its conclusions stand)

• the consequences of the financial crisis are so dire that the lesson here should not be that a bailout is necessary (it is, at this point) - but to acknowledge that the financial sector has the power to hold the rest of the economy to ransom during both good times and bad times and thus that it need to be emasculated so that we never get again to the stage where a bailout is necessary. The lesson is that the financial world cannot behave responsibly, if left to its own devices and thus should not be left to its own devices;
• another is that the main argument to give financial markets a free hand — that they have created so much growth and prosperity — needs to be called for what it is: a lie. Not only the so-called prosperity of the past year was highly unequally shared (see the next point), but it was not even real, as the income and profits of the good years are now dwarfed by the losses of today. Arguments about growth need to be dismissed by a reference to the "full cycle," i.e. the prosperity of the recent past can only be accepted as real if it wasn't a capture of the prosperity of today and the near future. If the forthcoming growth and GDP numbers are dismal, this should be seen as a direct proof that the growth of the past was nothing but, and that the policy prescriptions focused on financial profit are abject failures;

The pdf is a short report written by Robert F. Wescott and published in April 2006 by Securing America’s Future Energy. It was written when oil was ~$60 a barrel and addressed a scenario where the price of oil surged to $120 due to coordinated terrorist attacks on global oil transport infrastructure. Well, here we are, two years on at $120 oil (without the attacks) so it’s worth revisiting the analysis in light of the conclusion: The main conclusion of this note is that $120 oil would have profound negative effects on the world economy and global financial markets. ... Such oil prices would almost certainly precipitate a global recession.

Click to download pdf

I was complaining about the "Australian disease" in my post about coal to liquids last week, as it became clear just how much King Coal is coming to dominate the local economy.

Ross Gittens can see the sunny side of this though in today's Sydney Morning Herald, as he idly contemplates the de-industrialisation of the economy and the transformation of the nation into a giant quarry in "Everything's coming up roses", in which he predicts that we'll be "riding on the back of a coal truck" for the next few decades.

Global warming apparently isn't a problem in his eyes - or at least not one that people will bother to try and mitigate by burning less coal.

Topics include:

Economy – UK and Europe; Geopolitics - Caspian; Coal / China / Kyoto Protocol; Natural Gas - Iran; Russia - Wheat Exports; ASPO-USA P.O. Conf. – Media Response; Economy - USA

Topics include:

Oil Price; Economy - UK; Economy - USA; Population; Unconventional Oil Production Forecasts; Coal - UK; Peak Minerals.