Friday News Digest

At my suggestion, a couple of friends and I went to see the movie Skyline this week. I can't get it out of my head, but not in a good way. It was easily the worst movie I have ever seen. I am a sci-fi fan of a sort and the idea of aliens invading earth automatically makes a movie at least interesting to me. It is rude to talk during a show, but since there was nobody in the theatre except the three of us, we felt free to openly ridicule the entire thing. I'm sorry for wasting your time with this, but if I can save one soul from that torture it will be worth it.

Enjoy this week's news.

  • The NY Times had a piece this week on the issues with foreclosure paperwork and how this threatens to be damaging to the financial system. Understand that that this is not an issue over whether a delinquent property can be foreclosed on, it is a question of who can legally do the foreclosing. I feel like we've been here before....the soft warnings that grow into public concerns that grow into official reassurance that "it's all good". I don't know. Fool me once, shame on you. Fool me twice.... 

In the worst case, the banks will choke on the volume of bad loans they could be forced to reabsorb, leading to another financial crisis, the panel said. But the panel, which was set up after the financial crisis two years ago, also allowed for the possibility that concerns over paperwork irregularities will prove overblown and the crisis will recede.

“Despite assurances by banks and Treasury to the contrary, great uncertainty remains as to whether the stability of banks and the housing market might be at risk,” the report by the Congressional Oversight Panel said. It recommended giving banks new stress tests.

  • GM went public this week emerging from a controversial bankruptcy. I wonder what GM will make money on now that they are not going to make it from slinging cheap credit through GMAC. Selling cars? That's so 1960's. Look at a modern (Minnesota-based) company like Target, which made a fourth of its profit from its credit cards. Profits were up 23%, with 70% of that by robbing from tomorrow's consumption for today (aka, credit). Wonder why our economy is not resilient?

The upbeat report comes as Target reported a 22.6 percent increase in third-quarter net income, helped by improvements in its credit card business and expansion into food.

The cheap chic discounter said it expects a key revenue measure to rise more sharply than it has in any period in the last three years as it reaps the benefits of its new 5 percent discount offer for those buying with its branded credit card or debit cards.

  • There was a fascinating report issued this week by the International Energy Agency (IEA) indicating that we have passed peak oil, at least the bubbling crude type that is cheap and easy to extract as well as refine. As reported in the NY Times -- don't panic -- we'll still be able to get oil, just from "unconventional" sources. Conservatively, they project $135/barrel by 2035, seemingly a comfortably long ways off. (We are currently at $82/barrel).

According to a projection in the agency’s latest annual report, released last week, production of conventional crude oil — the black liquid stuff that rigs pump out of the ground — probably topped out for good in 2006, at about 70 million barrels a day. Production from currently producing oil fields will drop sharply in coming decades, the report suggests.

The agency does not see energy doom on the horizon, however. By its estimation, after a short dip in production, crude production will reach an “undulating plateau” of about 68 million barrels a day between 2020 and 2035.

  • The Oil Drum provided a deeper analysis that may raise more alarms. Based on projections for growth in places like China, India, Russia, Brazil, Africa and the Middle East, the report actually projects a permanent decline in consumption in the United States. With our economy so tied to oil, there is only one way we achieve a decline in oil consumption in the near-term: continued economic decline. Maybe we can buy some energy-efficient cars from India or some solar panels from China.

To make this a little more personal for those (like me) in the west, the IEA helpfully shows what this means for you as in individual. ie. You, the reader, will be using less oil next year, and the year after that (even in the IEA's economically calm and happy view of the world).

All of this is completely contradictory to the road building, car-loving enterprises of the western world. While the IEA has moved ahead in leaps and bounds over the last few years, most of the individual member nations of the IEA (Australia being a particularly bad example) are still running with internal forecasts and assumptions that support more roads, airports and other oil intensive infrastructure. 

  • State Farm knows that Americans are stupid. But like a good neighbor, they are going to help us through the radical transition of the American experience created by the introduction of the traffic circle. My fellow Americans, we can do it. Even though we will collectively miss the aggressive starts and sudden stops of our old ways, at least we are not being forced to do it using the metric system.

Slow down. When approaching a roundabout, slow down and get your bearings. Know where you want to exit the roundabout before you enter. Watch for any warning signs and obey the posted speed limit.

  • Alan Pisarski wrote a piece on "livability" this week that has drawn the ire of a few in the planning community. Our take: We'll gladly apply his logic to transit and trails if he'll apply it to highways and airports. 

[Pisarski] The problem here is a total disconnect between what people in a diverse democracy want, and what the central bureaucracy, and their academic allies, wish to impose. The livability agenda may be popular in the press and among pundits, but for most communities and people it’s neither popular nor remotely democratic.

I think it would be more accurate to say:

[Strong Towns] The problem here is a direct connection between what politicians in a two-party democracy want, and what the central bureaucracy, and their corporate allies, gladly provide. The "roads, roads, roads" agenda may be popular in an election cycle and among cheap populists, but for most communities and people it’s created untold financial hardship that can never be overcome.

  • You know the world is changing when my hometown is cited for its local food connection. For our Brainerd area readers, if you don't know about the Farm on St. Mathais, check them out. They are saving the world a day at a time. And if you are coming through town, check out Prairie Bay too - amazing food from an out-of-the-way place. And its local!
  • And finally, satire is the best comedy. This video uses some great satire to explain quantitative easing. Don't email me and tell me it is unfair to Goldman Sachs -- yes, there are other Wall Street firms too-big-to-fail that are in on this too. Just have a laugh at all of our expense.


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