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Many understand that this is a debt bubble and not only a collapse fueled by the subprime market in which low-income people bought overpriced homes. That in fact is a big player in this mess but many who once thought they were “prime” are going to be realizing there is nothing prime about them. Welcome to the even uglier side of things which is only in stage one at the moment. We now enter the Pay Option ARM debacle:

Pay Option ARM

The most ominous sign of the above chart is the following:

-$500 Billion in total Pay Option ARMs outstanding in the U.S.

-60 Percent of these issued to folks in California

On Sunday, after touring some of the worst flooded areas, U.S. Senator Tom Harkin of Iowa announced a federal disaster declaration for 13 Iowa counties – Adam, Boone, Cerro Gordo, Crawford, Dallas, Dubuque, Floyd, Franklin, Marion, Page, Story, Tama and Union, bringing the number of counties under this designation to 24.

Now that the counties have been declared, residents and businesses can begin applying for federal disaster assistance.

“These new disaster declarations are vital as we begin the recovery process in some parts of our state. Now more Iowans can apply for assistance and get the help they need,” said Harkin. “Still, there is much more work to be done and I will continue to see to it that other affected counties receive federal assistance.”

On the state level, Governor Chet Culver has issued a disaster proclamation for 83 counties. The governor’s proclamation activates Iowa’s individual disaster assistance program, which helps people with low incomes.

Meanwhile, the flooding, evacuations and road closures continue across the state.

U.S. light, sweet crude for July delivery was up $3.74 at $138.60 a barrel by 2:17 p.m., after falling as much as $1.40 a barrel, or about 1 percent, earlier in the session.

U.S. crude set a record high of $139.89 a barrel.

London Brent crude was up $3.05 at $138.16.

Prices leapt as the dollar fell after publication of data from the New York Federal Reserve that showed manufacturing in the state of New York contracted in June for the fourth time in five months.

“Prices rose sharply in three minutes. U.S. manufacturing data was weak, so it is pressuring the dollar down,” said Mike Wittner, energy analyst at Societe General.

Earlier in the session prices had dropped back after United Nations chief Ban Ki-moon said over the weekend that Saudi Arabia, the world’s biggest oil exporter, was set to increase output to 9.7 million barrels per day in July, its second supply boost in as many months.

That would be a rise of 550,000 bpd or over 6 percent since May and would take Saudi output to its highest monthly rate since August 1981, according to U.S. government data.

The sell-off sent shockwaves across an already jittery sharemarket, and has raised fresh questions about the long-term viability of the business model created by Babcock’s giant rival, Macquarie Bank, which has also been punished by investors.

With more than $72 billion of assets under management and carrying debt of $46 billion, Babcock & Brown has modelled itself on Macquarie, the company often known as the “millionaires’ factory” due to massive financial rewards enjoyed by its executives during the past decade or so.

Like Macquarie, Babcock has been a big investor in real estate, electricity and other infrastructure assets around the world.

The crisis of confidence in Babcock, and to a lesser degree Macquarie, spread across the broader market yesterday, with more than $35 billion wiped off the value of listed companies as the S&P/ASX 200 index fell 2.5%.

Mark Potter of Baker Young Stockbrokers said investors were punishing heavily indebted companies like Babcock after the financial collapse of others such as Allco Finance Group.

“We’re obviously in times where things haven’t been as difficult as this in credit markets for 20 or 30 years and so the assessment of the likes of Babcock & Brown at the moment is much different to what it was even 12 months ago,” he said.

Twenty-five banks providing $2.8 billion in finance to Babcock will meet on Monday to decide whether to demand a review of the company’s position after its market value fell by $850 million yesterday to $2.3 billion.

“There is a strong call from citizens for better control of the streets, for improved safety,” Defence Minister Ignazio La Russa told Sky Italia television.

“My hope is that particularly in the evening, in the cities, these troops can ensure greater safety.”

The government announced on Friday that up to 2,500 soldiers, some of whom have served in Afghanistan and Kosovo, would be made available for a trial period of six months to bolster the police in difficult urban areas.

Silvio Berlusconi’s new conservative government won an April election on a law-and-order ticket, and crime and public safety have stayed on top of the political agenda since Mr Berlusconi took office.

The government’s decision was attacked by the centre-left opposition, with Roberta Pinotti, defence spokesman for the Democratic party, expressing “firm opposition to the militarisation of the streets”.

Italy’s main trade unions said rather than using soldiers the government should make better use of 25,000 police who are doing desk work, and the mayor of Turin said the move was “populist demagoguery” that would hurt tourism and Italy’s image abroad.

“I have only seen soldiers on the streets in Bogota, but there the situation is rather different,” Sergio Chiamparino told La Repubblica daily.

Mr La Russa said he did not understand the criticism but specified that the use of soldiers would not be permanent, with the initial six-month period being renewable “just once.”

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia.

Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.

While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.

President Bush visited Saudi Arabia twice this year, pleading with King Abdullah to step up production. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher.

The Saudi plans were disclosed in interviews with several oil traders and analysts who said that Saudi oil officials had privately conveyed their production plans recently to some traders and companies in the United States. The analysts declined to be identified so as not to be cut off from future information from the Saudis.

2003 Rav4 EV (purchased from Cabe Toyota in Long Beach 12/28/02)
Silver with gray interior

The system can generate power just by supplying water and air to the fuel and air electrodes, respectively, the company said at the press conference, which took place June 12, 2008, at the Osaka Assembly Hall.

The basic power generation mechanism of the new system is similar to that of a normal fuel cell, which uses hydrogen as a fuel. According to Genepax, the main feature of the new system is that it uses the company’s membrane electrode assembly (MEA), which contains a material capable of breaking down water into hydrogen and oxygen through a chemical reaction.

Though the company did not reveal the details, it “succeeded in adopting a well-known process to produce hydrogen from water to the MEA,” said Hirasawa Kiyoshi, the company’s president. This process is allegedly similar to the mechanism that produces hydrogen by a reaction of metal hydride and water. But compared with the existing method, the new process is expected to produce hydrogen from water for longer time, the company said.

With the new process, the cell needs only water and air, eliminating the need for a hydrogen reformer and high-pressure hydrogen tank. Moreover, the MEA requires no special catalysts, and the required amount of rare metals such as platinum is almost the same as that of existing systems, Genepax said.

Unlike the direct methanol fuel cell (DMFC), which uses methanol as a fuel, the new system does not emit CO2. In addition, it is expected to have a longer life because catalyst degradation (poisoning) caused by CO does not occur on the fuel electrode side. As it has only been slightly more than a year since the company completed the prototype, it plans to collect more data on the product life.

At the conference, Genepax unveiled a fuel cell stack with a rated output of 120W and a fuel cell system with a rated output of 300W. In the demonstration, the 120W fuel cell stack was first supplied with water by using a dry-cell battery operated pump. After power was generated, it was operated as a passive system with the pump turned off.

This time, the voltage of the fuel cell stack was 25-30V. Because the stack is composed of 40 cells connected in series, it is expected that the output per cell is 3W or higher, the voltage is about 0.5-0.7V, and the current is about 6-7A. The power density is likely to be not less than 30mW/cm2 because the reaction area of the cell is 10 x 10 cm.

Meanwhile, the 300W fuel cell system is an active system, which supplies water and air with a pump. In the demonstration, Genepax powered the TV and the lighting equipment with a lead-acid battery charged by using the system. In addition, the 300W system was mounted in the luggage room of a compact electric vehicle “Reva” manufactured by Takeoka Mini Car Products Co Ltd, and the vehicle was actually driven by the system.

Genepax initially planned to develop a 500W system, but failed to procure the materials for MEA in time and ended up in making a 300W system.

For the future, the company intends to provide 1kw-class generation systems for use in electric vehicles and houses. Instead of driving electric vehicles with this system alone, the company expects to use it as a generator to charge the secondary battery used in electric vehicles.