Bush: Use Ethanol to Get Off Oil
March 6th, 2008I see dead people.
Via: CNN:
President Bush said the United States should “get off oil” Wednesday as crude prices hit record highs and renewed his support for ethanol use despite concerns the corn-based fuel is driving up food prices and isn’t more environmentally friendly than gasoline.
“We gotta get off oil, American has got to change its habits,” Bush told a crowd at the Washington International Renewable Energy Conference, a meeting of global energy officials and an adjoining trade show that’s the largest all-renewables show ever held in the United States. “It should be obvious to all, demand has outstripped supply, which makes prices go up.”
As the conference got into its second day, crude oil on the New York mercantile exchange jumped nearly $4 on falling oil inventories, trading over $104 a barrel and setting a new all-time record.
Part of Bush’s plan to wean the country off oil includes big investments in ethanol.
The energy bill passed by Congress and signed by Bush in December calls for refiners to replace 36 billion gallons of gasoline with ethanol by 2020, up from about 7 billion gallons today. About half of that will come from ethanol made with corn.
“That’s good if you’re a corn farmer, and it’s good if you’re concerned with national security,” Bush said.
Bush acknowledged some of the problems with ethanol, particularly its role in pushing up the price of corn. The price of corn has doubled since 2006 which has pushed up the price of chicken, beef and poultry – livestock fed with corn.
Also, crops like wheat and soybeans are becoming more expensive as farmers devote more acreage to grow corn as they rush to satisfy the demand for ethanol.
“I’m beginning to hear complaints from cattleman about the price of corn,” he said. “We’re going to do something about it.”
Bush said his administration has spent over $1 billion to make cellulosic ethanol – which can be made from non-food plants like grasses or wood chips – cost competitive. He also highlighted the use of biodiesel, which is diesel fuel made from agricultural and food waste.
“I’m confident the United States can meet those goals, for the sake of national security and the environment,” he said.
Citigroup to Layoff 30,000 Employees
March 6th, 2008Via: CNBC:
Citigroup’s job cuts could reach 30,000 or more over the next year and a half because of increasing writedowns from subprime-related debt, CNBC has learned.
The layoffs would exceed the previously reported 24,000 job cuts that had been expected at the banking giant.
Chief Executive Vikram S. Pandit is currently conducting a massive cost review and could cut as much as 10 percent of the bank’s workforce of 370,000, according to people familiar with the situation.
In the past, Citigroup would lay off people and then hire them back as consultants. But with more bad-debt writedowns looming, Pandit wants to make the cuts permanent, sources say.
Gold Soars to Record High of $995.20 Per Ounce
March 6th, 2008Shaking the apple tree… Mmm Hmm.
Via: Market Watch:
Gold futures closed with strong gains, after hitting $995.20 an ounce Wednesday, boosted by ongoing investment flows into commodities, a rally in crude oil and dollar weakness.
Gold for April delivery rallied $22.20 to end at $988.50 an ounce on the New York Mercantile Exchange. Earlier it surged to a record high of $995.20 an ounce.
More Capital Needed to Rescue Citigroup
March 5th, 2008Via: Telegraph:
Citigroup shares fell to their lowest level in almost a decade after the head of Gulf investment agency, Dubai International Capital, said the largest US bank would need to raise “a lot more money” from outside investors.
Shares of Citigroup slumped almost 5pc to $22.05 yesterday on top of falls of more than 50pc in the past 12 months. They are now at their lowest level since November 1998.
Citigroup has been forced to write off billions of dollars of debts tied to sub-prime mortgages – a move which has prompted drastic efforts to rebuild its balance sheet.
MSNBC: “I Hope We Have a Special Prison for 9/11 Conspiracy Theorists”
March 5th, 2008MSNBC ran a story about a 9/11 activist waving a sign at Bill Clinton. The activist was immediately dragged away, but pay attention to commentary from the goons in the studio. They want to activist, and people like him, to be disappeared and rendered in secret prisons.
Via: Infowars:
Video of the piece has now surfaced on youtube. Watch as the reporter sardonically states “you don’t do that because that’s when the secret service steps in”, while his yes people, including Joe Scarborough himself, who seem to be having their own conversations in the background, start braying “Tase him, tase him bro” like automated robots.
Potential for Sucker Rally on the Dollar
March 5th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
There’s potential for a sucker rally on the dollar. Looking at the daily interval chart of the U.S. Dollar Index, we see a stochastic cross up under 20. There’s no way to know if it will rally or not, but I can tell you what often happens in cases like this.
Once a major support is taken out and new lows are in (in this case the support was 74.50), the issue will often retrace back up toward the previous support (which is now overhead resistance).
The point of this post is to to mentally prepare dollar bears for a bounce, while pointing out some levels to watch. The most critical number is 74.50. I shaded the zone between where it is now and 74.50. This is prime sucker bounce territory. Suckers will see a bounce and think, “The bottom is in,” and go long. As suckers load up on long positions, the big boys get ready to blow the support columns.
USDX daily interval
I’ve also drawn the Fibonacci retracement grid from the high on Feb. 7 to the low on Mar. 3. Notice how the 38.2 line is above 74.50?
Maddening, isn’t it? While I don’t expect it to rally above 74.50, if it does, there’s the 38.2 resistance as well as well as 75 a bit higher.
Finally, look at the MACD cross down on the weekly.
USDX weekly interval
We had all those weeks of massive intervention and manipulation which created a lot of noise, and now we’ve got that cross down anyway. In summary, don’t let a short term rally right here rattle your cage too much. I watch this everyday. I’ll revisit the analysis if some of those overhead resistance levels get taken out.
Taking a quick look at gold: It has been whacked out overbought. Expect volatility. Near term support at $955.
Gold daily interval
So far, this recent knock down looks like an attempt to shake the apple tree. That is, as gold was closing in on $1000, big players shook out smaller speculators who came in thinking that $1000 was imminent. In other words, lock profit and use it to buy more gold lower in the run-up to Helicopter Ben’s “Vigorous Response” later this month. If that’s what happened, we could see an ascending triangle start to take shape, but I don’t want to get too far ahead of myself. Like I said, the indicators on the weekly are in overbought territory, just like they have been for months. They’re going to unwind at some point. Too bad there’s no way to know when. Trend lines and Fib fans and retracements are the ways to look at this one on the longer intervals.
In summary, short term shake outs possible on fake dollar rallies/cranks, but the overall uptrend is still very much intact. In fact, I just bought a couple more grams during these recent red candles.
Bernanke: “Vigorous Response”
March 4th, 2008Could a 0.75% cut really be on the table!?
Via: Bloomberg:
Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages for more borrowers whose home values have declined.
“Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,” Bernanke said in a speech in Orlando, Florida today. “Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.”
Bernanke’s call goes beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank’s Feb. 27 report to Congress called for lenders to “pursue prudent loan workouts” through means such as modifying mortgage terms and deferring payments.
“Delinquencies and foreclosures likely will continue to rise for a while longer,” Bernanke said in the comments to the Independent Community Bankers of America. “Supply-demand imbalances in many housing markets suggest that some further declines in house prices are likely.”
Subprime borrowers are about to see their mortgage rates increase more than 1 percentage point, he said. “Declines in short-term interest rates and initiatives involving rate freezes will reduce the impact somewhat, but interest-rate resets will nevertheless impose stress on many households.”
`Vigorous Response’
In the past, homeowners could refinance, though that option is now “largely” gone because sales of bonds backed by subprime mortgages “have virtually halted,” Bernanke said. “This situation calls for a vigorous response.”
Bernanke didn’t comment in his speech text on the outlook for the economy or interest rates. Traders expect the Federal Open Market Committee to lower the benchmark rate by 0.75 percentage point by or at the panel’s next meeting on March 18, based on futures prices.
Bush Guts Intelligence Oversight Board
March 4th, 2008Via: Unbossed:
On Friday afternoon the White House posted without fanfare a new Executive Order that revamps an important though little known intelligence board. There are a few minor changes, but the most radical revision appears to be that the board has now been stripped of nearly all its powers to investigate and check illegal intelligence activities. It’s difficult to see what legitimate reasons there could have been for gutting the oversight activities of the board in this way, and the WH has not explained the changes.
And perhaps not coincidentally, the board has been renamed. Under the older Executive Order from 1993, it was called the President’s Foreign Intelligence Advisory Board (PFIAB). Now it has been renamed the President’s Intelligence Advisory Board (PIAB), suggesting perhaps that the Bush administration had domestic intelligence activities in mind while making these revisions.
PFIAB is tasked with a range of things, but particularly with assessing “the quality, quantity, and adequacy of intelligence collection, of analysis and estimates, and of counterintelligence and other intelligence activities”; and with reviewing the performance of intelligence agencies. Board members are meant to bring an independent point of view to bear on intelligence activities; they cannot be employees of the federal government.
The Price of Wheat is More Than 80% Higher Than a Year Ago
March 4th, 2008A couple of points:
1. Those bulk grains we bought turned out to be our best investment yet.
50KG sacks of maize (left), 25KG sacks of hard wheat berries (right)
2. The corn based ethanol strategy is working perfectly; if potential for kill off is the metric in question.
Via: New York Times:
According to the United Nations Food and Agriculture Organization, the price of wheat is more than 80 percent higher than a year ago, and corn prices are up by a quarter. Global cereal stocks have fallen to their lowest level since 1982.
As usual, the brunt is falling disproportionately on the poor. The F.A.O. estimates that the cereal import bill of the neediest countries will increase by a third for the second year in a row. Prices have gone so high that the World Food Program, which aims to feed 73 million people this year, said it might have to reduce rations or the number of people it will help.
The world has faced periodic bouts when it looked as if population growth would outstrip the food supply. Each time, food production has grown to meet demand. This time it might not be so easy.
Population growth and economic progress are part of the problem. Consumption of meat and other high-quality foods —mainly in China and India— has boosted demand for grain for animal feed. Poor harvests due to bad weather in this country and elsewhere have contributed. High energy prices are adding to the pressures.
Yet the most important reason for the price shock is the rich world’s subsidized appetite for biofuels. In the United States, 14 percent of the corn crop was used to produce ethanol in 2006 — a share expected to reach 30 percent by 2010. This is also cutting into production of staples like soybeans, as farmers take advantage of generous subsidies and switch crops to corn for fuel.
The benefits of this strategy are dubious. A study by the Organization for Economic Cooperation and Development suggested that — absent new technologies — the United States, Canada and the European Union would require between 30 percent and 70 percent of their current crop area if they were to replace 10 percent of their transport fuel consumption with biofuels. And two recent studies suggested that a large-scale effort across the world to grow crops for biofuels would add carbon dioxide to the atmosphere rather than reduce it.
The human costs of this diversion of food into energy are all too evident.
February Earnings
March 4th, 2008In February, Cryptogon and Farmlet earnings from all sources came to a total of $2258.86, or about 4.5X the minimum monthly goal of $500.
February represents the best ever month for earnings.
We were having a very good month to begin with, but then we had a wildcard event. Dagobaz sent $1001! Thank you, Dagobaz. And thanks to all cash contributors.
Amazon sales were very strong. Thank you all for remembering to begin your Amazon sessions via Cryptogon. You guys bought everything from freeze-dried disaster food to glow in the dark condoms to electronics to books of every description.
I quietly created a page on the Store that shows all of the items that Cryptogon readers ordered on Amazon’s U.S. site. (Note: I have no idea who ordered what. Amazon doesn’t provide that information to affiliates.) I take the sales record and feed it into the aStore catalog.
The logic is, if one Cryptogon reader orders something, maybe there are more Cryptogon readers who would be interested in the same item too. (This is me stretching my high powered business acumen to the outer limits. *sarcasm*) Anyway, the feature lives or dies by orders. It’s a bit of a fiddle to keep the list updated. If people use it, great. If not, that’s ok too.
BullionVault users generated $85 in commissions. There were especially large transactions on British sterling denominated accounts. (I convert all BullionVault commissions into dollars for ease of bookkeeping.) Thanks for that.
Thanks also go out to the owners of the following sites for signing up for webhosting with BlueHost:
bewilder.com.au
chunkthis.com
doomers.us
gamegumbo.com
mountainpad.com
I’ve been with BlueHost for three years and, overall, their offering is an unbelievable value. I’ll be renewing for two more years when my current contract runs out next month. I don’t know if they have been improving things behind the scenes, but I had a story go to the top or Reddit recently, and BlueHost cranked it all out. Previously, when stories had gone to the top of Reddit, my site would exceed the allotted CPU time on the server, and they’d cut the site off for about a minute at a time while the traffic was spiking like that. But this last surge was something like 18,000 visits (that’s not page views, but entire sessions) in a 24 hour period. No problem. As someone who has been responsible for providing computer services to organizations, I’m literally in shock by what BlueHost is providing for $6.95 per month.
Last but not least, thanks to Financial Web for continuing their sponsorship of Cryptogon in February.
