This is the best strategic thinking I've seen in a long time.

Magisterial, and, unfortunately, all too likely.

Please accept my sincere compliments.

Regarding Freddie or Fannie and giving back those bad ol loans to the Lender, what IF some of those loans are already in Foreclosure or already foreclosed on? I mean, come on, we know there are a **** load of those.

Then the originator gets to eat the loss.

I'm telling 'ya, this is going to bankrupt lenders - including banks.

Lots of them.

It is also going to bankrupt brokers, but once you get his house and BMW, the chain will stop at the lender.

WOW..THATS STRATEGIC THINKING.

I dont think ive ever read anywhere about a possible conflict with russia and china.

Geez Gen- This is gonna be big and the biggest explosion the market will ever see. I think we all know very well that even if 15% of the homes that are in foreclosure or have been foreclosed upon have to go back to the originating Lender, they are just flat out screwed. We are talking really big ass money here. 15% is a very small number that I pulled out of the hat here. I am betting on 50-60%.

Question for Karl: I am a big fan of nuclear power as well, the only real answer for long term base load. My question ia regarding conventional renewables such as geothermal (NZ gets something like 70% from it), wave power and water sources, wind and solar thermal. Can you discuss these....

Terrific work. BTW, the ABCP did a cliff dive today. Just another nail in the coffin of the Great Credit Bubble.

Come on KD, you have been reading LATC, haven't you?

Matt Savinar would be proud.... when I read the ticker, I thought Matt wrote it. But rest assured, Matt is a sharp guy and so are you.... and you both see a future with nukes flying about. Hmmm.

Please expand on what drove you to write such a ticker.

Ironically, I read your posts and ticker as a balance to the more radicals pontificating our demise due to the lack of energy. Now you sound just like them, but they are less hopeful.

In closing, let me say this: There is absolutely nothing on the horizon to replace oil.

Nuclear power is really the only realistic answer at this point. Will it happen in time, or are we destined to follow the path to the Olduvai Gorge?

As I continue to "connect the dots", I can only assume that we are collectively ****ed.

You were the last voice of reason in the circle I follow.

I would like to make one point about a "crack-up boom" as Russ Winter and some others are defining it. The crack-up boom is a credit bubble blowoff phenomena, it is NOT a hyper-inflationary event. We can see this dynamic playing out in the oil and gold markets. These are attracting huge "hot-money" speculative bets by highly-leveraged players. This will invariably founder as the credit bubble implodes.

Russ is not a big believer in the hyper-inflation outcome and actually sees the dollar getting a solid bid at some point in the near future as global economies grind into recession. The deflationary recession and the crack-up boom are not mutually exclusive concepts and are two sides of the same coin.

http://wallstreetexaminer.com/blogs/wint....

There is one other "thing" that isolates this country and makes us strong beyond other global powers. SUB's with nukes.

Karl,

I think you are right on your predictions on the future. However, I think wind energy is going to be bigger than most realize. Its actually pretty cheap in places with a lot of wind. North/South Dakota could supply huge amounts of the US's electricity just by themselves if fully utilized. Germany is a good example of where wind is going, in some months 50% of their electricity is generated by wind.

Solar power has great potential in the SW US. Not from solar cell technology, but from solar reflectors. Granted this is more expensive than wind, but if energy costs go up too much this is a very viable option. Of course, a tech breakthrough could occur with quantum dot solar cell manufacturing making solar cells the way to go.

Its going to take years to build all this infrastructure however. And hydrocarbon fuels are going to be around for many years.

"In closing, let me say this: There is absolutely nothing on the horizon to replace oil."

Sandor,
You know this, I know this, Savinar, Simmons, Heinburg, Kuntsler, etc., knows this, but most people around here don't appreciate the gravity of the situation...all we need to do is build some nuclear power plants, kill a few "environmentalists" who are preventing us from drilling, build a bunch of wind mills in Nevada, squeeze some **** out of shale, lay solar panels across Arizona, harvest some plankton from the oceans...wait, maybe we can call captain Kirk to see if we can borrow some dilithium crystals...what a joke. It's over and we are the "lucky" ones to witness the beginning of the downside of Hubbard's curve...and there ain't **** we can do about it.

Quote:

and there ain't **** we can do about it

“Everything that can be invented has been invented.” – Charles H. Duell, Commissioner, U.S. Patent Office, 1899

Regarding the oil and energy situation, you are dead wrong.

Biomass will NEVER produce more than 5-10% of our energy needs.

We currently use TWICE the oil that the whole US produced during our oil peak in 1970-1971. There is NO WAY that we will find two Texases in the waters off California that we somehow missed before.

We will need to cut energy consumption by 90% to live out the fantasy you described in today's ticker, period. We may HAVE to do that eventually, but we will not find a way to do it gracefully or without trauma. Qualtiy of life will simply go down when the energy is not there anymore.

Also, did you say we're going to ramp up massive aquaculture in the desert? What will we tell the Angeloinos who are dying of dehydration? We're using your drinking water to make fuel for your cars? Perhaps nobody else in the country would be as hard pressed to decide how they feel about that...

Anyway, point is, the water ain't there for that. It could become just as big a problem as oil in the years ahead.

Perp, you're wrong on all counts.

You are correct that we cannot make enough fuel from VEGETATIVE biomass.

That's why we will do it with aquaculture.

Oh, the water? You think we have a shortage of that, right? Uh, no, we don't. We have a ****load of it - more than we can use. Its salty, which would be a problem but that's why we have the nuke plant sitting next to the growing areas - to run the desalination system.

We drill and go after the shale NOW to get us through the time required to build out the infrastructure to translate. At the same time we ban the gasoline engine in cars, which gives us an instant 40% improvement in fleet fuel consumption average with no change in vehicle size or mass composition (diesel fuel both contains more BTUs per gallon and diesel engines have no throttling losses and thus are more fuel efficient) Finally, we reprocess the existing vegetable oil (waste); that alone is only 2% or so of consumption, but its a start.

Will this be expensive? Sure. But is it less overall than paying for ever-increasing oil as demand outstrips supply? Absolutely - and oh, by the way, it is both sustainable and works.

"I will reiterate the prediction I made back in the spring: You are going to see a huge number of banks, thrifts and others seized by the FDIC, and the common stock of those institutions will be worth zero."

Karl

Applause from Las Vegas. Brings back fond memories of the late 1980s when shorting bonds from banks was like printing money.

Hmm. Maybe it is happening again...

You've all gone crazy, I hope.

Matt R.

Very much enjoyed today's ticker, KD. You definitely took on some "big picture", which is fascinating stuff to think about, and vital. And damned useful as a backdrop to sound investment.

It's amazing how major events that come as a complete surprise to most people can so quickly come to be seen as having been inevitable. I really appreciate your ability to look 6 months ahead on issues like the dollar in relation to fed actions, and the mortgage fraud put-back issue. Keep it up, more and more folks must be stumbling upon this site (with a link from friends in many cases).

For great style and similarly big-picture analysis, check out Spengler of the Atimes. One of my favorite columnists. Most Mondays. Here's a link to one entitled "Why Iran Will Fight, Not Compromise".

http://www.atimes.com/atimes/Middle_East....

I think the best thing anyone could do right now leading this country is to simply tack hard, like OMG hard into realistic fuel policies that get us all off the ME teat fast.

We do not want our economic wagon hitched to that hell horse any longer than we absolutely have to.

Sure while it's there burn it, burn it all and leave them back in the stone age when it runs out, but for heavens sake don't let that be plan A... you need backup plans out your ass.

Burning oil in your car will one day be illegal, as it's too important in the production of things to waste getting you somewhere, solar power can and should be used much more than it is, The Germans have subsidized it to the point that some companies have developed very low cost materials that will work right now for creating energy supplement sources simply by roofing every home with it, no it's not an end solution it's simply a great way to reduce peak demands.

http://www.treehugger.com/files/2007/09/....

Nuclear war and megadeath are inevitable. If you go the treehugger way, you will have massive death due to deprivation. Much more fun to blow things up and start over.

As for alternative energies to nuclear. They all stink. Ever been to Germany and seen the blight that windmills bring to the countryside. They are really ugly and ruin what would be a gracious, beautiful country. Solar roof panels? A lot of time and maintenance. Lifetime costs are huge.

Course we could always go with soylent green. Seems to be a big enough supply of biomass? Who will be first to help the world rid it of excessive carbon footprint? Step forward.

The battle for resources and religion is reaching a boiling level. These economic stresses of the moment will drive long periods of conflict. Russia and China have long been at odds over Siberia, and even Japan has been covetous of Siberia and Sakhalin among other areas. Pakistan will become a mess. We are in the throes of the end of a regime. India will break apart at the religious seams. Ever look around to see how many Sikhs are coming here?

The big unknown is Russia and Europe. Europe in 10 years will have a moslem population that will make a nonviolent future impossible.

Makes the US the best place again. Can't see going to Oz or NZ or Argentina. Too little going on. We just need to sort ourselves out.

we can solve two problems with the "stupid ****s"..

stupid ****s = soylent green

Alternative energy has one huge drawback, no one has figured out how to monopolize the profits yet.

So we get ethanol because it's subsidized and 10$ a box corn puffs as a reward, always a smart idea to burn your food, just brilliant.

The carrying capacity of the planet food wise is twice or more our current population.

Water is the problem, and of course energy.

Nature is as likely as anything to sort the mess out for us, war isn't an option in a nuclear age, only nutjob ME nations would do that, and they might but no pressure is that great on any sane nation now to start something.

I think the whole idea of going, "Green" is great, but the real advantages of it...on an enviornment level and a profit level will never really be seen in OUR lifetime...if we get that far that is.

Pd,
Point well taken! I'm a numbers man. Came close to majoring in Physics but went into Anesthesia instead. It's all about exponential growth. I'm sure most will not watch this but it is well worth the time. KD is flat out wrong. I wish he wasn't, and it was both hard and depressing for me to come to the realization that the show is over. You can't have a population of 1 billion in 1850 grow to 7 billion in just 150 years without consequences. Oil allowed this. In fact, caused this. In biology its called a J curve. Very common. A species whether its a bacteria, an insect, or human will continue to procreate given a PLENTIFUL AND CHEAP (easy) energy source. Once that energy source is used, OR IS NOT CHEAP AND PLENTIFUL AS BEFORE, the J curve collapses....

http://video.google.com/videoplay?docid=....