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| Thu Mar 24 22:46:19 2011 Bankrupt Portugal |
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| Thu Feb 10 16:39:00 2011 Peak Oil Revisited |
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| Tue Feb 8 22:51:24 2011 Free Internet |
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| Thu Mar 24 22:46:19 2011 Bankrupt Portugal Another EU domino falls? |
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| With the
tsunami in Japan, and
continued unrest in the Mideast, it was easy to miss today's headlines that
Portugal's prime minister resigned and
the country needed an EU bailout to avoid default.
Furthermore, not only is Portugal very likely to need a bailout, it increased speculation that Spain may be next. Why did Portugal's prime minister resign? Because all the opposition parties and most of Portugal's organized labor opposed his austerity measures to get the budget under control. Rather than accept the required spending cuts and tax raises to fix the country's fiscal problems, there were strong protests to raise government wages instead. Obviously, that would just make the problem worse, however much the wage increases may be desired or even deserved. This followed a familiar pattern:
Now we see the same pattern in Portugal, and I and others believe Spain will be next. I'll make a prediction that Spain will ask for an EU bailout before the end of 2011. One option may be to let Portugal default! Countries have defaulted before ( Sovereign Bankruptcies). Portugal isn't a complete basket case, and defaulting would still put them in a position where they'd have to enact severe austerity measures, but they could rebuild on their own. A default may not be much worse than an EU bailout anyway, and may be healthy to remind investors that giving your money to governments is not a safe bet. This would raise the borrowing costs for all countries, which would also be a good thing. And it would be a strong message to Spain that it needs to get its own house in order, and not also rely on an EU bailout. But I don't think that will happen. Portugal and Spain will ask for, and receive, EU bailouts instead. Before we in the US start pointing fingers, remember that our own budget is pretty hosed as well. In fact, just yesterday it was noted that our federal disability funds are about to run out because they are being abused by many states. And even without people abusing disability benefits, scheduled spending means Medicare and Social Security will start to hit insolvency in 2017. In fact, Medicare is already running a deficit and is burning through the taxes of previous years. And like everyone facing crises in European countries, even though the mathematics make it obvious that we have to reduce Medicare and Social Security spending, many people don't want their benefits to go down. (However, the latest bipartisan efforts to address the problem are a very encouraging step.) The main learnings? First, deficit spending does eventually catch up to you. And second, if a country lets things get out of control, most people won't want to fix it, because it will mean they'll have less money during the austerity period. That means fixes get postponed until they are too late, and the recovery (if it happens) is much more severe. The main thing is to vote for representatives that will get the budget under control. Representatives are terrified of touching Medicare or Social Security because they think we'll vote them out. We have to let our reps know that we'll support responsible budget planning, even if it means reduced benefits, to avoid bankruptcy. Comments |
Related: economics > geopolitics < predictions Unrelated: books energy environment lists mathematics science |
| Thu Feb 10 16:39:00 2011 Peak Oil Revisited Are oil reserves overstated? |
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| Today I saw another mention of a leaked cable from the
Wikileaks trove. People are apparently publishing new leaked cables all the time as they find
interesting tidbits.
This particular series of leaked cables showed that throughout 2007-2009, US diplomats believed that Saudi Arabia had overstated its crude reserves by up to 40 percent. In particular, a high-ranking executive at Saudi Aramco, the Saudi Arabian national oil company, stated that he believed their reserves were inflated, and he convinced US diplomats and other international energy experts. In general, there have long been suspicions that OPEC countries have inflated their reserves. It has been hard to tell how worried to be: how much of the bump was due to improved measurements or accounting changes, versus more arbitrary changes? The leaked cables are significant because they indicate that even insiders believe the reserves are arbitrary inflated to a large extent. Does this mean we'll suddenly run out of oil? No, there are still around a trillion barrels of proven reserves. But the Saudi/Aramco reserves are most critical because now that Russian production is declining, Saudi Arabia is the only country in the world who is capable of keeping up with the world's growing oil consumption. And the problem with limited reserves isn't that we run out of oil, instead the problem with limited reserves is that the cheap oil runs out quickly, leaving only more expensive oil to be extracted. And so, over time, oil production peaks. The leaked cables indicate that Saudi oil production could peak in the next ten years, which they say is "not good news." Worse, it means global oil production could peak earlier--if it hasn't already. The bottom line? As I've said before ( Peak Oil), expect gas prices to start going up significantly again, and they probably won't come down. Or if they do come down, it will because of further economic recessions, not improved production. So start planning now! Expect gas to hit $5 or even $10 a gallon in the next ten years. If you do a lot of driving, see if you can move nearer to public transit, because you won't want to be driving much. Comments |
Related: economics > geopolitics < environment Unrelated: books energy lists mathematics predictions science |
| Tue Feb 8 22:51:24 2011 Free Internet More thoughts on free Internet... |
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| In my previous post (
Upheavals in the Middle East) I mentioned my crazy idea for giving free Internet connections (and smart
phones) to people in repressive regimes. The idea is that by having the the
ability to communicate with each other and the outside world, people in those
countries would be able to avoid one of the chief tools of repression: limited
access to information.
Also, within repressive regimes, access to communications and outside information can itself be an agent for change and improvement--and even revolution. Witness how Tunisia and Egypt both attempted to crack down on the Internet during the recent protests, with Egypt going to particular extremes. In fact, Egypt cut off Internet access just as I was posting my blog entry about using the Internet as an asymmetric attack against repressive regimes! Talk about coincidences. Yesterday Slashdot had a link to a story about how the US has secret tools to force Internet on dictatorships (which references a Wired story as the primary source), which I thought was awesome timing given my blog post! Obviously both Wired and Slashdot read my blog a lot. However, the story isn't quite what I was thinking. The Wired story talks about how the US Gov't could take out foreign computer networks (hardly news) or even restore some Internet service to localized areas via flying networks or satellite dish drops. All in all, I found it pretty underwhelming, and small-scale. Plus, as the article noted, flying our own aircraft in someone else's airspace could be construed as an act of war, even if we were just flying Internet relay stations. No, it's way better to go the full deal. Set up satellite-based internet, using satellite-enabled smart phones or routers. Then people could get access to the Internet, and communicate with each other, without us having to invade peoples' air space. In fact, we could just provide satellite-based Internet hubs, and people could use their own smart phones. That would be more flexible and cheaper. [Providing a satellite network does raise the problem of antisatellite weapons, but having satellites isn't by itself an act of war.] Would providing a satellite-based Internet for North Korea, China, or Myanmar be expensive? Sure, maybe billions of dollars a year. But a war costs billions of dollars a week. So providing free satellite-based Internet to repressive regimes could be even more effective, at a fraction of the price, not even counting the lives saved. Comments |
Related: economics > geopolitics < Unrelated: books energy environment lists mathematics predictions science |
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