Free Republic

The old saying goes that just because you're paranoid doesn't mean everyone else isn't in on it. It's starting to feel that may be true in the bond market. For years (even decades) there have been theories about collusion between America and Asia in the government bond arena. Through the 1980s and 1990s, Japan supported America by buying Treasuries. And since 2000, China has stepped into that fray. Using its trade-earned dollar holdings to invest heavily in American paper. The conspiracy camp says Asia has been brow-beaten by America into doing so. There is no sound business case for them...

There is an open secret in the oil industry that dare not speak its name: peak oil. Well, two did speak its name and gained no acclaim for it. One, M. King Hubbert, died years ago. The other and the most controversial, Matthew Simmons, died at his Maine summer home Aug. 8. The peak oil idea is simple: Oil is a finite commodity, and one day we are going to use up all of it. Hubbert, a geologist, began speculating on the effects of the gradual decline in worldwide production in the 1950s. He expressed this in a simple graph,...

The lingering impact of August 3, 2010, clash on the Israeli-Lebanese border lies in the greater context of, and wider strategic dynamics in, the Middle East. These aspects were highlighted by HizbAllah Secretary-General Hassan Nasrallah in his speech later that day. See Defense & Foreign Affairs Special Analysis, August 4, 2010: Clash on Israel-Lebanon Border Holds Potential for Strategic Escalation. Overall, the issue dominating the overall situation in the Middle East is the reaction by the local powers to the emerging new grand strategic reality: namely, the demise of the United States as the dominant regional power. This is a...

I am going to address a touchy subject in this essay, but I simply can’t ignore it any longer. I have noticed that a lot of people are finding my blog through keyword searches of “Debunking Matt Simmons.” About two and a half years ago, I did write an essay called Debunking Matt Simmons. Because of Matt’s recent claims about the disaster in the Gulf of Mexico, there has been a spike in interest over whether his claims related to the disaster are actually credible. So now seems like a good time to revisit the subject. Claims like "BP will...

Advocates of a smooth transition away from petroleum may be surprised by the consequences of huge swings in the cost of oil. I first proposed a "head-fake" in the price of oil in 2008. My thesis was that the oil exporting nations had become so dependent on revenues from oil that even as prices plummeted in global recession, they would have no choice financially and politically to pumping every barrel they could. This would increase supply even as demand fell, causing prices to crash. This dynamic would drive prices down to lows which are widely considered "impossible" in an era...

Iran is at the centre of a global storm: targeted by new sanctions, suspected by Washington, defended by Brazil and Turkey. But the complex diplomacy around its nuclear programme could be ended by decisions made not in the United States but in Israel. Iran has returned to the centre of international diplomacy, and with a vengeance. A week after the crisis over Israel’s assault on an aid-flotilla bound for Gaza, the United Nations Security Council on 9 June 2010 adopted a resolution imposing another tranche of sanctions on the Tehran regime over its contested nuclear programme. The response - from...

Scientists from the California Institute of Technology (Caltech) have developed a new solar cell that they hope will cost a tiny fraction of current production. The new cells consist of tiny silicon wires that measure a mere 1-micron in diameter. These wires are embedded lengthwise and perpendicular into plastic plates where they convert light into electricity at an exceptional rate of efficiency. Any light that is leftover bounces around inside the wire matrix until it finds another wire that can absorb it, thus nearly all the light is captured and converted into electricity. Professor Harry Atwater at his namesake research...

We have learned from Federal Emergency Management Agency (FEMA) and U.S. Army Corps of Engineers sources that U.S. Navy submarines deployed to the Gulf of Mexico and Atlantic Ocean off the Florida coast have detected what amounts to a frozen oil blob from the oil geyser at the destroyed Deep Horizon off-shore oil rig south of Louisiana. The Navy submarines have trained video cameras on the moving blob, which remains frozen at depths of between 3,000 to 4,000 feet. Because the oil blob is heavier than water, it remains frozen at current depths. FEMA and Corps of Engineers employees are...

The foundation of the American lifestyle and economy is cheap oil. Remove that prop and every aspect of that lifestyle becomes questionable. Not to sound too cinematic, but everywhere I look, I see cheap oil. The results, of cheap oil, actually; or more precisely, a complete and total dependence on cheap, abundant oil. When I see expansive, well-manicured lawns, I see cheap oil. When I see busy airports and taxiing aircraft, I see cheap oil. When I see news about the latest "surge" in Afghanistan, I see cheap oil. When I see goods from China on sale for less than...

The Horn of Africa has become a hotbed of piracy due to outdated maritime laws, the lack of a Somali government and gut-wrenching poverty. Where there is a sea, there are pirates. - Greek proverb To many people, the term "piracy" evokes images of the movie Pirates of the Caribbean. Until last year piracy was an annoyingly persistent low-level irritant for maritime nations, clustered around several global hotspots, including African waters, the Straits of Malacca and relatively isolated incidents in Latin America. Last year the problem metastasized in the waters of Somalia, where now a motley international coalition of about...

“With all the hysteria, all the fear, all the phony science, could it be that manmade global warming is the greatest hoax ever perpetrated on the American people? I believe it is.” – US Senator James M Inhofe (Republican – Oklahoma), 28 July 2003. Such is the rallying cry of the climate change denial movement. Since Senator Inhofe made this statement seven years ago, the drive to discredit climate change and the science that underpins it has enjoyed considerable success, even as awareness about climate change and the threat it poses to humanity has gone mainstream. The US, widely seen...

As oil continues to pour into the Gulf of Mexico, I thought it might be helpful to review how we got where we are today. The graph below shows total U.S. consumption of petroleum products (in red) and oil production from U.S. fields (in green). Consumption has been growing pretty steadily since 1981 while production has been declining. About 3-1/2 million barrels per day of the gap between these two lines is made up by refinery process gain, natural gas plant liquids, and other liquids. But most of the gap must be met by U.S. imports. Each year that our...

UK Prime Minister Gordon Brown, who faces a tough re-election battle in next month’s parliamentary vote, hopes his devotion to clean energy will put the wind at his back. Brown has reaped the benefits of his long courtship of wind turbine manufacturers in recent weeks as one after the other the large international companies have pledged hundreds of millions of dollars in new investments that will create thousands of jobs and make the UK a leader in wind energy. The government’s budget last month included 60 million pounds for port improvements that spurred two of the biggest turbine makers, General...

The recent crisis and instability in Kyrgyzstan, highlighted the fragility of security and the potential weakness of the political systems throughout the region and exposed new dimensions in the conduct of Kazakhstan’s foreign policy that may well prove pivotal for US energy interests in the Caspian Sea region. These complexities, often disguised or downplayed by the national governments in the region, attest to the deep political fault lines running through Eurasia as well as the potential for events in one state to ignite potential cross-border discontent and instability elsewhere. Indeed, an analysis of the nuances in approach, media coverage, and...

Oil prices plunged on Friday after the U.S. Securities and Exchange Commission charged Goldman Sachs with fraud in its marketing of certain subprime mortgage securities, amid a general sell-off in financial and commodity markets. The allegations against one of the biggest market makers in virtually every markets dampened speculation heading into the weekend. Much like the volcanic eruption in Iceland spewed a cloud of dust over northern Europe that grounded all air travel, the SEC charge cast a pall over financial markets. The May contract for West Texas Intermediate, which expires next week, settled down $2.27 or 2.7% at $83.24...

Kyrgyzstan’s mass anti-government protests last week were essentially the culmination of more than a decade of disillusionment and dissatisfaction that accumulated in the nation’s political, economic and social spheres from the period of Akayev to his successor Kurmanbek Bakiyev, with virtually every Kyrgyz concerned about rising prices and falling standards of living, both issues of little concern and dimly understood in Washington. BAKIYEV FLEES The diplomatic logjam over the fate of deposed President Kurbanbek Bakiyev has apparently ended, as on 15 April Russia’s Itar-Tass news agency reported that Bakiyev, along with his younger brother Dzhanysh, former head of the country’s...

The recent unrest in Kyrgyzstan has largely been portrayed as an epic clash between U.S. and Russian interests. That said, interest in events in Bishkek extend far beyond Kyrgyzstan throughout the regional and one should expect the following voices to add their concerns as the situation evolves. While largely overlooked by media coverage, their influence could be a significant factor in both interim and long-term solutions that emerge to Kyrgyzstan’s recent upheavals. CHINA Kyrgyzstan shares a 533-mile border with China. Kyrgyzstan’s primary value to China is as a market for its goods and is interested in economic expansion and access...

I thought I was seeing things yesterday. The Federal Reserve released its weekly numbers on U.S. bank lending. And it looked like there had been some kind of mistake. Outstanding loans and leases at U.S. commercial banks jumped by a staggering $420 billion in the week ended March 31. An unprecedented leap. US Bank Loans and Credit – Chart As it turns out, there's a reasonable explanation. It's not that Americans suddenly rushed to take out loans. The jump was caused by "Financial Accounting Statements No. 166". This new set of rules deals with the way U.S. banks must handle...

I just finished reading a 144-page document from the Committee of European on ways to prevent market abuse. The paper discusses myriad ways regulators can browbeat listed companies into following disclosure rules. Basically, it's 144 pages on how to force people to tell the truth. Here's the ultimate truth on market regulation. It can't be done. We have insider-trading rules that require company officials to report their personal buying of stock in the companies they own and run. We want to know if the CEO is driving the stock up, or blowing out his holdings ahead of bad news. This...

The March 29, 2010, martyr-bombings in the two Moscow Metro stations served as a reminder of the escalating and evolving jihadist surge into Russia’s soft underbelly. The bombing took place at peak rush hour. The first martyr-bomber detonated herself at 7:56am in the Lubyanka station which serves the Kremlin’s bureaucracy. The second martyr-bomber detonated herself at 8:37am in the Park Kulturi station, a connection and transfer station from the Ring Line leading to Moscow’s center. Both martyr-bombers detonated themselves inside train cars just as the doors were opened to let passengers in and out. At the time of writing, the...