Oil in the Gulf: The 100 Million Gallon Truth

By Sandy Prisant

The 24-hour news cycle and the explosion of media mean an awful lot of people need to do an awful lot of talking about the Gulf of Mexico Oil Catastrophe and anything periphal to it: the President's image,  volume of oil recovered, compensation claims, oyster beds, marshes, barriers, ruined vacations, Federal law, etc.

And BP is really OK with all that because it means a lot of help for them in keeping your eye off the ball.  So what should you do?  

Don't Listen. There is only one fact that matters and from which all consequences spring:

The consensus of US technical experts from the Government's flow rate panel, the University of Indiana  U.S. Geological Survey and Woods Hole Observatory  is that "from April 22 when the Deepwater Horizon rig sank until June 3 the well has gushed 1.26 million barrels of oil, or 52.9 million gallons." (Blomberg News) 

Since the leak cannot be stopped for at least another 75 days therafter, (until new side wells are completed)  the most conservative estimate insures a total spill of 3-3.5 million barrels.

 

 

According to the Department of Energy, there are 42 gallons of oil in one barrel. And that means the only fact you need to think about is this: By the end of August BP will have spilled into the Gulf, a minimum of:

 

130 MILLION GALLONS OF OIL

130 MILLION GALLONS OF OIL

130 MILLION GALLONS OF OIL

 

 

 

The Great Word War: 4? 5? 6?

By Sandy Prisant

Don't look over there. Look over here. It's all going on over here.

Is it a World War Or a Word War? Or a Media Circus? It no longer seems to matter 

We seem to be answering one of the great questions in human relations through a real-life experiment, acted out by deadly serious people.

What happens when two sides are locked in a struggle to the death for decades, except one side is unable to kill off its adversary and the other side refuses to?  What happens?

Nothing definitive like The Charge of the Light Brigade or the Attack on Pearl Harbor; that's apparent.  What we're left with is two sides quibbling over land rights, media rights and most vitally, the Narrative:   The story each side tries to endlessly to sell its followers and the rest of the world about the sheer, heart-rending decency of their own position, and only their position.

The explosion of the digital age has trumped the explosion of C4 incendiary devices. In a conflict where one side's poor use of arms makes them look bad and the other side's very   efficient use of arms makes them look badder, both sides realized they need another way.

Hamas understood it had to stop looking like The Gang Who Couldn't Shoot Straight. Israel realized it had to stop being accused of "disproportionate force", merely because it could hit targets and the other side couldn't. 

And then suddenly both sides realized the heavy lifting could be done in this war by simply turning it over to CNN, SkyNews and the Hindustani World Service.

As sad as each of these incidents are for all of us, they have merely become "starter pistols" for the next round of the Word War between Hamas--which never conducts itself like a state-in-waiting--and Israel.  

As the Media War has replaced the shooting kind. It's not at all about reality. Like much of life, Its always about perception and whose narrative is more compelling.

Hamas plays this the only way it can if you've been on  the losing side for 50 years--impishly firing off a sling shot when the teacher's not looking--and hoping she overreacts.


Why the Israeli's can't envision and better prepare for just this kind of game , the rather predictable result of all its military success,  is a bit of a mystery.


Does the Israeli Defense Force really want to be left with a narrative that says "100-plus misguided civilians, many school girls, left us with no option but to kill a dozen because ONE (1) stole a gun from our well-armed soldier? Oh and someone had a knife, maybe."

Where has the guile of Entebbe gone? Where has the shrewd 1967 downing of Egyptian MiGs without touching a single decoy, gone? How could Israel not have had
a military strategy for this and future media
battles, which is now what these incidents are ALWAYS about? In short, what the hell is going on in the planning bunkers of Jerusalem?

From the Gulf to the Amazon: The Environment & You (Part I)

by Sandy Prisant

While you read this, I sit here. Waiting for the Oil.  The oil that will  shred the very thin economic base of my depressed state, like single-ply toilet paper.  Worse...it turns out it doesn't even matter if the oil actually gets here. The ill-informed, fickle tourists of our great nation are panicking--and cancelling--already.

Apologies, but I can't resist Pogo's over-used line:"We have met the enemy and he is us."

What does that mean?  It means what in God's name are we doing?  To ourselves?  Our planet?  Our self-interest?  Once, elf-interest was merely a euphemism for greed. Now it's been elevated to a political doctrine.  And it's winning. Hands down.

There is a significant school of political thought which unabashedly argues that the Only
real reason for a nation to exist is the furtherance of its own, superficial self-interests. That's not academic babble. It's Real Politik.  Let's see how it's working...

For openers, it explains why the UN is doomed to permanent joke status; why the Copenhagen Environmental Summit was slightly less coherent than Times Square on New Year's Eve; and why--despite knowing (KNOWING) Gulf oil drilling could NOT provide energy independence, we collectively said, "What the Hell; drill baby, drill." (aka The Sarah Palin Doomsday Energy Policy).

Well, the Gulf of Mexico may be gone for our lifetime, but not to worry--cynicism and our past blunders aside, there'll be more environmental challenges in the weeks ahead. Why, just last month the mythic Amazon Jungle was given Hollywood status--the very lungs of the world, just when we're putting most of the oil we don't spill in the sea, up, up in the air.   Surely we can get this one right.

Can we?  It's been my privilege to visit this colossal wonder and to meet its people and I want you to know this may be tricky.  Because as much as we all want to hate BP, it turns out if you're honest and ethical and moral, doing right by the existing environment and native cultures is actually hard work.

For some, eco-culture wars are a no-brainer.  Black and White.  We outsiders are all BP. Natives are good guys who want to be left alone. It seems obvious. From a distance.

But in real life, the Arara tribe of central Brazil and the Hurarani indians and the Kaiapo Nation, one of the Amazon's most respected, sometimes don't stand still and play to passive stereotype--not when the government wanted to throw up a dam in the name of progress and block the Amazon's Xingu River. None of these guys may have an I Phone, but somehow they were hip enough to learn of the blockbuster "Avatar" and shrewdly got a potential dam-stopper in Producer James Cameron. He is now the natives' white knight.

Setting foot in the Amazon for the first time, Cameron promptly declared to more than 70 indigenous people, some holding spears and bows and arrows:

"The snake kills by squeezing very slowly. This is how the civilized world slowly, slowly pushes into the forest and takes away the world that used to be."  

Mr Cameron's equation seems fair enough: Development = BP.  No Development = Julie Andrews.

But if you delve a layer down, into this most crucial of eco-systems, you begin to see that the clash of cultures and oil drilling (Texaco started in this jungle in 1993) and Hollywood is way more complicated than Mary Poppins could ever imagine.

In Part II, we'll meet Oscar a true native son of the Amazon and a man of the jungle, like the natives who met Mr Cameron.  A tracker by trade, Oscar can spot an endangered 4-inch bird at 300 meters with his bare eye.  His village reverently named him "Great Owl".

A dignified young man with straight black hair down his back and a cool, steady gaze, Oscar speaks no English, but sounds just a little bit like an autoworker from Michigan.

"Jobs," Oscar says.  "We need more jobs. And more American volunteers building improvements in our villages."

Why is a native speaking this way?  Because unlike Hollywood, he knows there will be more change in the Amazon, in the Age of Self-Interest.  Even if Big Oil encroaches no further than it has.

The real questions are: can self-interest be tempered? Is there such a thing as change that preserves native culture, traditions, life---the tangibles and intangibles that define the distinct heritage of these already dwindling Amazon tribes?

The real questions are:  will the future just be about the money and man's ambition and $5 foot-longs?  Remember, this jungle provides more of the world's oxygen than any continent you're now standing on.  Will we flatten it?  Will we send it the way of the Gulf of Mexico?

The answer:  The jury is still out.  Stay turned for Part II.

BRAZIL: Where the Flag is Always Greener

Notes from Rio
By Sandy Prisant



If America has already seen it's best days, then it's likely the next wave will include the BRIC nations.  The "B" of course, is for Brazil . We recently visited Rio and here are eight things we learned in six days about a new player on the block.

• Economy. Petrobras is the state oil company. It is growing like crazy and finding reserves like crazy. It is not run by sinister, incompetent government lackeys, but sharp oil guys. It is not like 200 Nigerians syphoning off that country's greatest resources. Petrobras is the most important oil company based in the Southern Hemisphere. It already competes with the likes of BP and Shell.  And it is the stalking horse for a country pushing out into the world.
• Image. Last year, this new Brazilian self-confidence was given a flashy, but pricey reward--Rio was voted the host of the expensive 2016 Summer Olympic Games. The first ever in South America.
• Maturity. But this immediately raises questions about whether the new boy on the bock is ready for Primetime.  The language of Brazil is Portuguese. That is not the language of South America and it is not the language of more than 90% of the foreign visitors coming to see The Olympics. "Well,'' you might say, "the 2nd language of Brazilians must be Spanish or possibly English?" But for the most part, the 2nd language is either football (soccer) or dancing. Or both. Any strictly English speaker who knows world- class football can hold an almost coherent conversation  with a Brazilian Portuguese speaker. He only wants to talk about football anyway--not whether Brazil will get a UN Security Council Seat.  But there is still the Olympics problem--Brazilians have historically beeen reticent to adopt other languages--even the Spanish of all their neighbors.  It is obliged to import hundreds of thousands of skilled workers who can speak more international languages.  So how will several million locals be able to meet the tedious, practical and continuous needs of many Olympic guests, expecting to be well-cared for after such an expensive trip? And if that kind of job can't be done well, what does it say about the nation as a near-term international player?
• The stereotype that even some Brazilians dislike, is absolutely valid. Brazil is about football and dancing.  We arrived at our hotel before noon,  and saw no less than 7 games being played on our TV'---from England, Spain, Germany, Italy--and 3 in Brazil.   If you sit in an outdoor restaurant at night, you will eventually see 2 or 3 girls break into impromptu dance to the rhythms of a far-off radio, purely for the girl's honest pleasure.
• Politics.  One Sunday morning we heard a great roar down in the street, below our window.  It was a popular protest against the imminent visit of Iran's President Ahmadinejad.  In what seemed unnecessary, but quite purposeful, Brazil's respected President  Lula Da Silva rushed to tell the world,"It is a very great honor for the people of Brazil  to be visited by the President of Iran."  No Brazilian we spoke with felt honord. Maybe this was some big deal in the works with Petrobras?  There was no obvious explanation for the "Lion of the South" getting into bed with "The Axis of Evil".
• The streets of Rio.  This city does not have great sites to visit, per se. Instead, it draws the visitor to half a dozen fine venues from which one can view the lone majestic site--the panoramic sweep of Rio itself.
• The people. As a capital in development, Rio sorely lacks a middle class.  The "Very, very Haves" jostle in the streets with the "Very, very Have Nots'.  The latter, mostly naked from the waist up, are only wearing shorts and cheap flip flops, doing little.  The "Haves" are wearing very expensive flip-flops and are variously adorned from the waist up in jewelry that exceeds the annual income of any "have not". As in developing countries elsewhere, one can eat very well--but at New York prices.
• The Beaches.  We have visited beaches on 6 continents. The famed Ipanema is possibly the most overrated.  The sand is coarse and full of garbage.  The sea delivers a fierce undertow at the shoreline that quickly flips newcomers.  On the 1st day we arrived, we wondered why the hotel had a roof pool, only two blocks from the beach. By the 2nd day, we understood.

So, has Brazil arrived? There is one clear litmus test--the departure fee at the airport. This is the one sweeping generalization that never fails:  If a government forces you to pay them in hard currency as a charge for simply leaving--after taking $300 from you to get a visa back at the start--then that country cannot yet be taken seriously.

Bottom Line:  when a million learn fluent Spanish, a tenth of that English and when Brazil's economy can make it without airport blackmail, go take a look. The country will get there in the end.

1st in War; 1st in Peace; 37th in Health Care

Probability of death in males 15-60 in US, Australia and Sweden; 1970-2005

(Compiled by US official data and World Health Organization)

By Sandy Prisant

In the week we apparently have decided to adopt collective amnesia and opt for total denial rather than health care reform, don't walk just yet.  Remember that the problems won't be walking away. And remember that left unsolved, they will simply scuttle all the other economic stuff you'd now prefer to think about:

Ranking 37th —

Measuring the Performance of the U.S. Health Care System

Christopher J.L. Murray, M.D., D.Phil., and Julio Frenk, M.D., Ph.D., M.P.H.

New England Journal of Medicine  (6/1/10)

Evidence that other countries perform better than the United States in ensuring the health of their populations is a sure prod to the reformist impulse. The World Health Report 2000, Health Systems: Improving Performance, ranked the U.S. health care system 37th in the world1 — a result that has been discussed frequently during the current debate on U.S. health care reform.

The conceptual framework underlying the rankings2 proposed that health systems should be assessed by comparing the extent to which investments in public health and medical care were contributing to critical social objectives: improving health, reducing health disparities, protecting households from impoverishment due to medical expenses, and providing responsive services that respect the dignity of patients. Despite the limitations of the available data, those who compiled the report undertook the task of applying this framework to a quantitative assessment of the performance of 191 national health care systems. These comparisons prompted extensive media coverage and political debate in many countries. In some, such as Mexico, they catalyzed the enactment of far-reaching reforms aimed at achieving universal health coverage. The comparative analysis of performance also triggered intense academic debate, which led to proposals for better performance assessment.

Despite the claim by many in the U.S. health policy community that international comparison is not useful because of the uniqueness of the United States, the rankings have figured prominently in many arenas. It is hard to ignore that in 2006, the United States was number 1 in terms of health care spending per capita but ranked 39th for infant mortality, 43rd for adult female mortality, 42nd for adult male mortality, and 36th for life expectancy.3 These facts have fueled a question now being discussed in academic circles, as well as by government and the public: Why do we spend so much to get so little?  Comparisons also reveal that the United States is falling farther behind each year (see graph). In 1974, mortality among boys and men 15 to 60 years of age was nearly the same in Australia and the United States and was one third lower in Sweden. Every year since 1974, the rate of death decreased more in Australia than it did in the United States, and in 2006, Australia’s rate dipped lower than Sweden’s and was 40% lower than the U.S. rate. There are no published studies investigating the combination of policies and programs that might account for the marked progress in Australia. But the comparison makes clear that U.S. performance not only is poor at any given moment but also is improving much more slowly than that of other countries over time. These observations and the reflections they should trigger are made possible only by careful comparative quantification of various facets of health care systems.

Of course, international comparisons are not the only rankings that should inform the debate about reforming the health care system. Within the United States, there are dramatic variations among regions and racial or ethnic groups in the rates of death from preventable causes. While aiming to provide solutions to the problems of incomplete insurance coverage and inefficiency of care delivery, health care reformers have given insufficient attention to the design, funding, and evaluation of interventions that are tailored to local realities and address preventable causes of death. The big picture — the poor and declining performance of the United States, which goes far beyond the challenge of universal insurance — will inevitably get lost if we do not routinely track performance and compare the results both among countries and among states and counties within the United States.

Although many challenges remain, the available methods and data are better now than they were when the World Health Organization’s rankings were determined. As part of its reform efforts, the U.S. government should support and participate in international comparisons while commissioning regular performance assessments at the state and local levels.

Experience has shown that whenever a country embarks on large-scale reform of its health care system, periodic evaluations become a key instrument of stewardship to ensure that initial objectives are being met and that midcourse corrections can be made in a timely and effective manner. To be valid and useful, such evaluations cannot be an afterthought that is introduced once reform is under way. Instead, scientifically designed evaluations must be an integral part of the design of reform. For instance, the recent Mexican reform adopted from the outset an explicit evaluation framework that included a randomized trial to compare communities that were introducing insurance in the first phase of reform with matched communities that were scheduled to adopt the plan later. This external evaluation was coupled with internal monitoring meant to enable policymakers to learn from implementation.

In addition to its technical value, the explicit assessment of reform efforts contributes to transparency and accountability. Such assessments can also boost popular support for reform initiatives that inevitably stir up fears of the unknown. In the polarized political climate surrounding the current U.S. health care reform debate, the prospect of periodic evaluations may help reformers to counter many objections by offering a transparent and timely way of dealing with unintended effects. Built-in evaluations may be the missing ingredient that will allow us to finally reform health care in the United States.

COMEBACK: HOPE IN AMERICA

By Sandy Prisant




Most of Florida Power & Light rate hike rejected


TALLAHASSEE, Fla. (Associated Press) 15 Jan -- State regulators under pressure from politicians and consumer advocates Wednesday rejected more than 99 percent of Florida Power & Light Co.'s request to raise base rates by $1 billion this year and all of a $247 million proposal for 2011.

-----------------------------------

Yogi Berra was right. It ain't over 'til it's over. Just when Sen. Dodd is jettisoning a US Consumer Protection Agency in finance. Just when the President's "body of work" is resulting in poll numbers that look more like those of the man he replaced. Just when Haiti slips light years further away from hope. Just at this moment--a little light shines at the end of the tunnel, in The Miami Herald article quoted above. 



A small group of people and public defenders took on a giant. And won. In real life. In a place where they still can't figure out who won the 2000 election. In a state where a dozen or so local public officials are ousted or arrested for corruption almost every year. This means that a few serious people (albeit with the Governor's implicit support) can still get things done in this age. That's to Florida's credit and a hopeful reminder to the nation.



Having been afforded the opportunity to testify before the Florida Public Service Commission in this matter and then provide line-by-line analysis of Florida Power & Light's combined rate petitions, here are paraphrased excerpts from sworn testimony to the Florida PSC in West Palm Beach, August 2009:




"Commissioners, good evening. My name is Alexander Prisant. I'm a homesteader in Boynton Beach and was previously a manager for the American Electric Power Company, one of the very few utilities in this country a good deal larger than FP&L. Maybe it would be helpful if I gave you a slightly different perspective from what I have been hearing tonight and what is actually happening here.



"Just to quickly cover my credentials, I helped write Congressional testimony for the US House of Representatives that led to the construction of 14 nuclear power plants around Lake Michigan. I was personally responsible for setting up the strategy for the lawsuit against the entire US Environmental Protection Agency and the personal lawsuit against the Director of the EPA in the 1980's. So I am a friend of big power.



"Having said that, I am embarrassed by what is being proposed here and I have been embarrassed by petitioner's presentation. There are a couple of hard truths that need to be talked about. In general, these proposals are outside---and I can only speak for myself personally--but outside of my 30 years of experience, outside of industry norms, and unconscionable without better performance.


"In the several states where American Electric Power operates, I had to make these kinds of presentations to people who demanded proof of performance. The hard fact is that within the industry, at the top level, Florida Power & Light is not considered a leader in best practices.




“The performance of transmission and distribution functions in Florida are not equivalent to many states. I am shocked to hear that in 2009 you folks are still trying to grapple with weather issues. In AEP’s states, we have tornado issues. We had to address those 30-40 years ago. Did Florida not have hurricanes 40 years ago? Instead you want the taxpayers, during a Depression, to take care of them now. No vision at all.




“Next: It is hard for consumers to understand a lot of the technical issues involved; this is a complex industry, but there are red flags that any of us can see. FP&L, in its first bill, offered me insurance at my cost for power surges—which would provide an extra payment to the utility as reward for poor performance, while FP&L avoids all liability.




“What is really scary is that I was offered a similar deal by an electric utility once before—in the Middle East. Does FP&L want to operate to the Middle Eastern standard?




“What specifically is the $1.6 billion in rate hikes over 2 years to be used for? I have heard no specifics tonight. If I walked into a hearing in the state of Indiana, for example, and said: ‘listen guys, I just want to raise my one billion dollar profit up to two billion,’ I’d have been run out with a shotgun.




“As effectively a protected monopoly, with a protected return, FP&L is now asking for a 12.5% ROI. Two things come to mind: First, how many companies of this size in this state have a guaranteed income of 12 or 11 or 10% ROI? I can’t think of any. And I’ve really tried.




“Next, if there is guaranteed rate of return of even half that—I have no background in finance—I guarantee you that within one week I will deliver to this Commission six sovereign wealth funds, three hedge funds and three other major financial groups from around the world that, in this environment, will dive in with both feet for a guaranteed rate of return of 6.25 or 6.125%. Think about it—this is a time when the Chinese and Japanese are having to live with T-bill rates of 2 percent. They would jump at 6%.




If, as FP&L proposes, investors were offered 12% guaranteed, off its customers’ backs, those investors might rightly fear Federal authorities intervening, because there must be something illegal going on.”




Commissioner Edgar: “May I ask you to sum up, please.”




Mr Prisant: “Yes. I will sum up by just saying this: Florida is losing population.


What is going on here?”

How Are We Really Doing? America slides deeper into Depression as Wall Street revels

December was the worst month for US unemployment since the Great Recession began.

By Ambrose Evans-Pritchard

International Business Editor

The Telegraph, London 

History repeating itself? President Obama has been accused by some economists of making the same mistakes policymakers in the US made in the Great Depression, which followed the Wall Street crash of 1929, pictured Photo: AP

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.


Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.


Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.


This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.


This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.


US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."


David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.


Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.


The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.


Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.


This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.


How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.


Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.


His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks