Juggling Dynamite

Saudi Arabia is seeking compensation from oil-importing nations if wealthy countries reduce their oil consumption. See: Saudis Seek Compensation for any drops in oil revenues :
“Petroleum exporters have long used delaying tactics during climate talks. They view any attempt to reduce carbon dioxide emissions by developed countries as a menace to their economies…
Environmental advocates denounced the idea, saying the Saudi stance hampered progress to assist poor nations that are already suffering from the effect of climate change, and that genuinely need financial assistance.
“It is like the tobacco industry asking for compensation for lost revenues as a part of a settlement to address the health risks of smoking,” said Jake Schmidt, the international climate policy director at the Natural Resources Defense Council. “The worst of this racket is that they have held up progress on supporting adaptation funding for the most vulnerable for years because of this demand….
A recent study by the International Energy Agency, which advises industrialized nations, found that the cumulative revenue of the Organization of the Petroleum Exporting Countries would drop by 16 percent from 2008 to 2030 if the world agreed to slash emissions, as opposed to the projection if there were no treaty.
But with oil projected to average $100 a barrel, the energy agency estimated that OPEC members would still earn $23 trillion over that period.”
$23 trillion in profits are expected even with reduced consumption, and who owes who a rebate here?
Some don't believe that carbon emissions are accentuating global warming. So let's take that hot button out of this discussion. What about kicking dependence on oil in favour of domestic, clean, renewable energy that avoids the need for our military to patrol the Middle East; that stops spending billions on foreign energy imports and starts reinvesting in the development of alternative energy jobs and products that most of the world would buy.
The Saudis could do that too, if they ever stop trying to prevent change and get on with creating solutions. Next thing we know, the dinosaurs in Canada’s oil patch will be looking for compensation too.

Last month Obama delivered yet another speech of strong talk against Wall Street antics:
“We will not go back to the days of reckless behaviour and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.” But sadly, so far, words are all we have from all the promises of reform.
This morning Bloomberg reports that under the moniker of “counsellor”, Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms:
“The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.
As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.”
Watch this clip: Geithner Aides Made millions helping banks, Hedge Funds
This abuse of fiduciary duty should make us noxious. It is a flagrant breach of public trust. It is an embarrassment to the government, the nation and an affront to voting people everywhere.

Lakshman Achuthan at the ECRI has been making some pretty confident statements in recent months. He says leading indicators tell him that the recession ended this summer, a V recovery is now underway and no meaningful downturn in the stock market is likely ahead. I would love to admire such confidence about an unforeseen future. If I knew less, I might. Unfortunately experience has taught us that over-confidence in this area is naive and financially dangerous.
A close study of the past few cycles shows that ECRI's leading indicators have not offered accurate advance warning of downturns but rather have tended to coincide with or slightly trail stock market movements. Not only did the ECRI not predict the start or depth of the present downturn but back in 2002 the ECRI was also predicting an “imminent recovery” based on a recovery in the stock market:
“At the point of ECRI's recovery forecast, the SPX was making its first post-9/11 rally highs at a January 2002 close of ~1,130 (print high of 1,177). The SPX fell thereafter from April 2002 by ~30% to the September closing low and ~35% peak to trough in October.
The SPX made a secondary higher low in March 2003 some 14 months after ECRI's “imminent recovery” call.”
For a lengthy and detailed review of their track record read: A look at ECRI's recession predicting track record