US economic recovery is complete. pt 2

[OilFinder2]

You know what Warren Buffet says ...

No Sign of Recession With Rising Rail Shipments Showing Trend to Expansion

Railroads shipments are the highest in almost three years, helping to defy concerns about a double- dip recession.

Total rail volumes excluding grain and coal averaged 381,831 carloads in August, the most since October 2008, according to data from the Association of American Railroads in Washington. These shipments represent the bulk of materials for industrial production, so rising volumes show the economy is still growing, according to Art Hatfield, a transportation analyst in Memphis, Tennessee, at Morgan Keegan & Co.

“We’re not seeing declines in rail volumes that are synonymous with a recession,” Hatfield said. “We remain in a slow growth environment.”

The correlation between the 12-month average of total rail- car loadings excluding grain and coal and the three-month average of the Federal Reserve’s manufacturing industrial- production index is 0.82, according to Bloomberg News calculations. A correlation of 1 would show they move in lockstep, while a value of zero signals no relationship.

Manufacturing output -- which makes up 75 percent of all U.S. factory production -- climbed 0.5 percent in August, the fourth consecutive increase, according to Fed data released this month.

[...]

Bloomberg

[kiwichick]

even americans can work out that rail is cheaper than road

[Daniel_Plainview]

Dow Falls Most Since October 2008 on Recession Concerns

Sept. 23 (Bloomberg) -- U.S. stocks fell this week, sending the Dow Jones Industrial Average to the biggest loss since 2008, as the Federal Reserve said risks to the economy have increased and concern grew that policy makers will fail to spur growth. ... “The likelihood of a recession in the U.S. has clearly risen this week,” Andrew Slimmon, the Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney LLC, which has about $1.7 trillion in client assets, said in a telephone interview. “Although the economic data is still inconclusive, the U.S. equity market is focused on the impact of a global slowdown and we remain cautious.”

Stocks fell after the Federal Reserve said there are “significant downside risks” to the economy and investors speculated central banks are running out of tools to prevent a recession. The MSCI All-Country World Index of shares in 45 nations extended its slump since May 2 to more than 20 percent this week, meeting the definition of a bear market. Benchmark measures for 32 out of 45 nations in the index have also reached that threshold. The S&P 500 must fall 4 percent to get there.

... “Confidence disappeared from the market this week after the Fed's statement,” Alex Tedder, who helps manage about $12 billion in global stocks at American Century Investments in New York, said in a telephone interview. “People are realizing that there are not a lot of options left.”


... The world is poised for another financial crisis, with sovereign debt its epicenter, said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., which runs the biggest bond fund.

[OilFinder2]

even americans can work out that rail is cheaper than road

Truckload Carriers Seeing Strong Demand

Truckload demand is stronger than the general economy, with TransCore Freight Solution’s spot market index climbing 47 percent from a year ago in August.

Spot market freight demand even increased 4.5 percent from July to August. Over the past decade, freight volume dropped 2.9 percent on average from July to August.

Truckload carriers also are reporting steady demand. Swift Transportation this week said it expects freight volumes to be up 4 percent year-over-year in the third quarter.

“Jerry (Moyes) and I have visited over 50 customers in the last couple of months and the majority are positive on a strong holiday season,” said Richard Stocking, Swift's president and chief operating officer.

Stocking said many customers are concerned about future capacity. “It is amazing how fast capacity tightens when things get busy.”

[...]

Landstar Says Freight Demand Still Strong

Weakening economic conditions haven’t slowed trucking giant Landstar System, which says it gained truckload freight and raised rates in July and August.

“Although there was much talk of a major economic slowdown or double dip recession, Landstar has not seen any evidence of a decline in freight volume activity,” Chairman, President and CEO Henry Gerkens said Sept. 2.

“Overall demand in the first two months has been relatively stable and pricing has remained strong,” Gerkens told analysts in a mid-quarter conference call.

Excluding substitute less-than-truckload linehaul freight, loads hauled in the first eight weeks of the third quarter increased 5 percent year-over-year, he said.

“In fact, the current (annualized) rate of volume increase was higher in August than July and I anticipate an even larger rate of increase for September,” said Gerkens.

Pricing, based on truckload revenue per load, increased 9 percent in July and August from the same period a year ago, he said.

[...]

[prajeshbhat]

even americans can work out that rail is cheaper than road

Unfortunately trains are good for the society. In America, anything that is good for the society must be trashed and burned before it blossoms.

[Alan Cain]

AH that brings back memories, I had a Vic20, I used my sisters old "Bay city rollers" tape to record the programs

Vic 20 commodor 64 let me look out in the barn, that vic 20 is out there somewhere under the junk pile...LOL

HMM an afternoon playing PING

I had a Sinclair/Timex 1000. whenever I plugged in the extra RAM pack, the neighbors' television sets went BONKERS!! I finally wrapped it in aluminum foil (like in my hat) and grounded it to the water line. The neighbors were grateful, and peace reigned. Then I got a PCjr, and then an Amiga 1000 (I almost got a Mindset; but there was the Commodore 128 coming out but I didn't have enough money, so I waited and am I glad).

I gave the Amiga to my 6 year old, and now he is a systems administrator for Real Networks (he is older than six, though).

[Alan Cain]

YOU DOG YOU!!!

You had TWO floppy drives!!! TWO!!!??!!?!?!?!? *RAGE*

You had a floppy disk??? A DISK!?!? RAGE!!!!

In my last year of high school, it was a 140 CPM remote teletype. No screen. You stuffed the actual telephone receiver into an audio coupler for the 300 BAUD modem. Paper tape was the only way to save programs. (About 8 bytes per inch storage density on thin paper strips that tore easily). Nerds carrying calculators had nothing on us. WE carried our programs on rolls of paper tape.

Punch cards (college until 1979 when we finally got a modern minicomputer) seemed like nirvana after paper tape UNTIL I dropped a large COBOL program in a mud puddle. My RAGE needed plenty of exclamation points that night as I shouted the F-word several times... We had a whopping 16K main menory on that 60's era IBM college computer, it filled a large room, ran one program at a time, and the (1 meg) hard drive platters were so slow you started writing code trying to minimize movement of the access arm, which groaned like an old man. There were many hundreds of lights. It really did look sort of like a giant WOPR computer from the "Wargames" movie.

I never DID get a tape to actually READ anything on a Commodore 64. I called it a "write-only device", though I dunno if it ever successfully WROTE anything either.

So, when floppy disks came out that actually tended to WORK RELIABLY-- it was just amazing to me.

When the first 10 meg hard PC drive came out and I could quit shuffling through LOTS of floppies several years later -- amazing again.

...

Now I want my 2 TB portable drives to cost under $100 and prefer USB-3 support, and my 16 GB jump drives to cost under $20 AND be relatively fast. How quickly we become spoiled.

THAT brings back the memories. The second time I dropped my box of cards (maybe into that same mud puddle) I took to making a big red magic marker line diagonally across the top of the cards while they were STILL in the box. That magic made me never drop them again. Ahhh, symap and coropleth maps. The world is better now.

[Alan Cain]

YOU DOG YOU!!!

You had TWO floppy drives!!! TWO!!!??!!?!?!?!? *RAGE*

You had a floppy disk??? A DISK!?!? RAGE!!!!

In my last year of high school, it was a 140 CPM remote teletype. No screen. You stuffed the actual telephone receiver into an audio coupler for the 300 BAUD modem. Paper tape was the only way to save programs. (About 8 bytes per inch storage density on thin paper strips that tore easily). Nerds carrying calculators had nothing on us. WE carried our programs on rolls of paper tape.

Punch cards (college until 1979 when we finally got a modern minicomputer) seemed like nirvana after paper tape UNTIL I dropped a large COBOL program in a mud puddle. My RAGE needed plenty of exclamation points that night as I shouted the F-word several times... We had a whopping 16K main menory on that 60's era IBM college computer, it filled a large room, ran one program at a time, and the (1 meg) hard drive platters were so slow you started writing code trying to minimize movement of the access arm, which groaned like an old man. There were many hundreds of lights. It really did look sort of like a giant WOPR computer from the "Wargames" movie.

I never DID get a tape to actually READ anything on a Commodore 64. I called it a "write-only device", though I dunno if it ever successfully WROTE anything either.

So, when floppy disks came out that actually tended to WORK RELIABLY-- it was just amazing to me.

When the first 10 meg hard PC drive came out and I could quit shuffling through LOTS of floppies several years later -- amazing again.

...

Now I want my 2 TB portable drives to cost under $100 and prefer USB-3 support, and my 16 GB jump drives to cost under $20 AND be relatively fast. How quickly we become spoiled.

THAT brings back the memories. The second time I dropped my box of cards (maybe into that same mud puddle) I took to making a big red magic marker line diagonally across the top of the cards while they were STILL in the box. That magic made me never drop them again. Ahhh, symap and coropleth maps. The world is better now. My jobs run the same day I submit them now. But that makes me feel a bit older.

[Alan Cain]

If you're growing marijuana or some expensive specialty crop, yeah maybe you can make a decent living off of 20 acres. Unfortunately most people don't eat marijuana or expensive specialty crops, they eat things made from grain, soybeans, veggies, cows, pigs, chickens, etc. So maybe 1% of farmers in pstarr's fantasy world could make a decent living, but the other 99% would be condemned to povery.

So you are an expert farmer as well as an oil-exploration engineer? What you do you know about anatomy, because you seem to have something alien lodged up your butt hole? Is that your brain or mouth?

Seriously, I think a lot of us will be making livings on small acreages - we had best HOPE so if people are going to eat something other than soylent green. I can think of lots of ways of making money on my land; pay attention here: after pot is legalized, that is NOT one of them, nor is it now. There was a big bust across the river last week with LOTS of helicopters and big bad DEA dudes. Grapes, fruit trees, wine (yummmm.... wine), brandy, and on and on. And the amount of grain it takes to feed yourself does NOT require hectares and hectares; most of what the big farmers do is based on competing on the global market and with giga-corporations like Cargill and Monsanto, and it does require some serious farming equipment. Used gigantic tractors cost less than my little Yanmar diesel.

You personally? If you get 60 to 70 bushels per acre of wheat like they do around here (dryland, yet!!) you can easily feed yourself, your family, and some livestock (goats, cows, sheep and chickens, maybe a pig or ten), using well documented crop rotation systems, on much less than twenty acres. The Department of Agriculture even publishes a book called, "5 acres and Independence." I got my copy at the Safeway in Walla Walla WA! I have 133 acres though...

In fact, since the current wheat farming method includes commercial ammonia inputs the livestock are required to provide some poop back onto the soil. And a 2 or 3 acre grain rotation system COULD be done by hand. Did I mention small stead baking?

Bread, cheese and wine, some tomatoes and green beans, some squash and corn, a little home made sausage from that doggoned sheep that keeps bumping into the kids; there are far worse ways to live. I am fermenting some pickles this year - they smell incredible (as in good).

For example, if you wanted an absolute hellhole (is hell a forbidden word? Carlin didn't mention it, I believe) you could live in an unsustainable community like (drum roll) Las Vegas. Not on a bet, not with eggs, not on a plane and not on a train. I would not live there, Sam I am. Think Greece, or Italy. Much nicer.

I am putting my extra money into more solar panels, for more water and for led lighting, and more water tanks - one tank will be to run a small hydrogenerator at night, since batteries only last a few years -IF you treat them right; agriculture is seriously fun, and very rewarding (financially and personally). I am also getting more fermentation vessels and I'm thinking about oak trees for oak adjuncts for my wine. I have deer abatement methods (a .308 and a .243, and I just saw the coolest crossbow on Eaarth - scope, crank and hand grip in just the right place). Let's see: Hops, barley, wheat... Did you know that hops make deer hallucinate? It is seriously funny except they are eating the bottoms of my hops. I could get some cutouts of cougars (we have them here - the cougars, not the cutouts) and make them pop up when the deer push against the fishline around the hops (they can't see the fishline and it freaks them out - a form of abatement)... I digress.

The point is that there will be an economic revolution, and it will involve small farmsteads and a return to a world wherein we do things by hand. The economic recovery in the long run will be a very positive thing; my children are very welcome and I have room enough for them all and their families; the more I think about it, the more exciting it is!!!!!! There IS a future; it isn't what I envisioned when I was 20, or 30, or 40, or 50, and it will be hard work, but so what. Work makes you strong, or kills you. Either way, okay.

So, Mr. Oilfinder (I used to work for Shell Oil and Nuclear, and for Peabody Coal (Denver) until I got smarter), making a living on small acreages is very possible; especially with large populations to feed. I won't hire you, though, if you don't have callus on your palms and holes in the knees of your jeans; maybe you can cut some wood for a meal, then on your way. Only one boss here.

Unless the clathrates let go. Game over. No future for my kids. THAT scares me.

[Cloud9]

Crockett’s Victory Garden and Square Foot gardening are good sources. The general consensus is with intensive agriculture that about two acres will feed a family of four. There is a learning curve in gardening and I am still in it. Back yard gardening may not be the solution for all but it is at least part of the solution.

[PeakOiler]

A company which I think is a good bellwether for the economy is FedEx.
Their stock chart is not looking too good in the last six months:



Reference:

http://investors.fedex.com/phoenix.zhtml?c=73289&p=irol-stockquote

An interesting quote from Wikipedia:

Political donations and lobbying

According to the Center for Responsive Politics, FedEx Corp is the 21st largest campaign contributor in the United States. The company has donated over $21 million since 1990, 45% of which went to Democrats and 55% to Republicans. Strong ties to the White House and members of Congress allow access to international trade and tax cut rebates as well as the rules of the business practices of the United States Postal Service. In 2001, FedEx sealed a $9 billion deal with the USPS to transport all of the post office's overnight and express deliveries.[18]
In 2005, FedEx was among 53 entities that contributed the maximum of $250,000 to sponsor the second inauguration of President George W. Bush.[19][20][21]
During the first three months of 2010, FedEx spent nearly $4.9 million lobbying the federal government (UPS, FedEx's main competitor, spent $1.6 million on lobbying over the same period), a 4% increase from the $4.7 million spent during the last quarter of 2009, but more than twice what it spent on lobbying during the first quarter of 2009.[22]

[pstarr]

Alan, beautiful vision, and real for the lucky few of us who have access to good land and water. However for the rest, the vast majority of suburban/urban dwellers will remain dependent on this collapsing economy. Your beautiful vision adds another dimension to this thread, which has become mostly just a slap fest with pretty pictures.

[babystrangeloop]

Crockett’s Victory Garden and Square Foot gardening are good sources.

My bet is on
http://www.edibleforestgardens.com/

and/or
http://www.polyfacefarms.com/

[Daniel_Plainview]

Bloomberg -- Commodities Tumble in ‘Downward Spiral’ Amid Recession Concerns

September 23, 2011, 6:46 PM EDT

Sept. 23 (Bloomberg) -- Commodities fell to a nine-month low, led by routs in metals, on deepening concern that governments are running out of tools to avert a global recession, eroding prospects for raw-material demand. European officials may accelerate the setup of a permanent rescue fund as the sovereign-debt crisis mounts. On Sept. 21, the Federal Reserve said the U.S. economy faces “significant downside risks.” In the next two days, gold plunged the most since 1983, and copper had the biggest slide in almost three years. Today, silver posted the largest drop in 32 years.

“We’re in a downward spiral, and no one knows when it’s going to end,” said Robin Bhar, an analyst at Credit Agricole SA in London. “There is a lot of uncertainty at this time as to how demand will develop.”

... “We are seeing commodity prices correcting, so they are more compatible with the global economy,” said Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen. “When we have fears over the economic cycle as we have now and a higher probability of contraction, it hits industrial metals and commodities.”

... “We’re in a ‘risk-off’ mentality,” Bill O’Neill, a co- founder of Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “Some of it certainly is a case of sell the winning assets to meet the margin calls for the losing assets. We’re seeing massive selling across the spectrum in commodities.”

One of the surest indicators of an imminent, oncoming recession is a collapse in oil prices ... such as when oil plunged to $33/bbl in 2008.

[Daniel_Plainview]

Crude posts worst week since May on recession fears

NEW YORK, Sept. 23 (Xinhua) -- U.S. crude price settled below 80 dollars a barrel on Friday, ending the week with the largest decline since May 6 amid rising fears of global economic recession weighed heavily on the crude markets. ... Billionaire investor George Soros even believed the United States is already experiencing the pain of double-dip recession.

On Thursday, the eurozone's purchasing managers' index (PMI) slipped below 50 for the first time in two years, suggesting an economic contraction. And the European powerhouse Germany's business activity figures dropped to a 26-month low. Meanwhile, China's factory activity also contracted for a third month.

Investors realized that the two major oil consumer, the United States and Europe, were facing great downside risk, which was definitely bearish for the oil prices. "We have a fragile recovery in America and difficulty in Japan, but Europe has the danger of really having a major crisis either in the banking system or in general. If that happens in Europe it will almost surely take the United States into a second downturn because we are each other's biggest trading partners," said Michael Spence, a Nobel laureate and professor for economics at New York University.

... After the worst week in four months, the market sentiment is negative. Market watchers are largely pessimistic of oil's performance next week. With continuing fears over eurozone sovereign debt problems and doubts about U.S. and global economic growth, they see less upside possibility, but more room for another sell-off.

According to a Bloomberg News survey of analysts, 22 of 40 respondents, or 55 percent, forecast oil will decline through Sept. 30, while nine, or 23 percent, predicted prices will increase. Nine estimated there will be little change.

[Daniel_Plainview]

Int'l Bus. Times -- Global Recession 2011: It's Real, and It's Going to Hurt

September 23, 2011 3:21 PM EDT

Let's face the mounting facts and just say it in plain English: The world is slipping into Global Recession 2011, and governments don't have the gunpowder to ward it off. The U.S. economy is barely growing at all. Companies aren't hiring. The federal budget deficit is above $14.5 trillion. Companies are stockpiling cash because, as Ford CEO Alan Mulally said in a press conference this week, because "the consumer has pulled back." ... N. Roubini, the professor at New York University who predicted the collapse of the U.S. housing market and predicted the 2008 recession, said in a speech this week that we may already be in a recession. He said, however, that the U.S. just won't admit it. ...

[dolanbaker]

One of the surest indicators of an imminent, oncoming recession is a collapse in oil prices ... such as when oil plunged to $33/bbl in 2008.

unlikely to collapse that much this time, flat out producers will ease off at any opportunity and producers of the expensive sources will simply stop when the price drops below the "worth getting out of bed" price.

Both actions would put a springboard under the price!

[Daniel_Plainview]

One of the surest indicators of an imminent, oncoming recession is a collapse in oil prices ... such as when oil plunged to $33/bbl in 2008.

unlikely to collapse that much this time, flat out producers will ease off at any opportunity and producers of the expensive sources will simply stop when the price drops below the "worth getting out of bed" price.

Both actions would put a springboard under the price!

I agree and disagree.

The average marginal cost of producing a barrel of oil is roughly between $50 and $63 (as of 2008). In the short-term, oil companies will sell below marginal cost to maintain cash flow, avoid idling workers, etc.; in the long-term, you are correct that producers will discontinue producing at below marginal cost.

If the world enters into a deflationary depression, it's entirely possible for oil to plummet to $30/bbl -- or even $20/bbl -- in the short-term.

In 2008, the only reason oil stopped at $33 rather than $13/bbl is because the various central banks unleashed unprecedented monetary life-support (stimulus) to defeat the deflationary collapse.

In 2011, nothing has been fixed, and the core problems have festered and multiplied. We thus face an even more dire deflationary potential ... and one which the central banks are increasingly powerless to prevent.

Given the rampant sovereign debt problems and other unresolved issues (such as the $250 trillion derivative bomb), a 2011-12 deflationary collapse could be enough to topple this already-fragile house-of-cards.

[rockdoc123]

The average marginal cost of producing a barrel of oil is roughly between $50 and $63 (as of 2008). In the short-term, oil companies will sell below marginal cost to maintain cash flow, avoid idling workers, etc.; in the long-term, you are correct that producers will discontinue producing at below marginal cost.

If the world enters into a deflationary depression, it's entirely possible for oil to plummet to $30/bbl -- or even $20/bbl -- in the short-term.

In 2008, the only reason oil stopped at $33 rather than $13/bbl is because the various central banks unleashed unprecedented monetary life-support (stimulus) to defeat the deflationary collapse.

I have to disagree on a number of points. The "marginal cost" is not a concept the we use in the oil industry to determine whether we will continue to produce existing oil or explore for new oil. The cost we look at is operating cost...that cost it takes to produce and transport the product to the point at which sale happens. There is a lot of oil that has low operating costs so it can be produced economically for short periods of time as long as the price is higher than OPEX. OPEX around the world is quite variable, anywhere from around $7/bbl to as much as $40/bbl. As a consequence there is no one magic number for when oil will be shutin, it is a complex equation. As to exploring for new oil the thought is we need around $75 -$85 /bbl to make it worthwhile for companies. If you understand economics this makes sense simply because there are huge risked costs up front that have to be balanced by discounted future revenues.

If we are talking about the world as a whole and supplying its demand a $13/bbl would mean that a very small fraction of current production would remain on stream, the same can be said for a $20/bbl and the same for a $40/bbl. There is a point at which there will not be enough economic production to support demand no matter how poor demand is. And given all of the current production is on decline without further investment then we are left with the thought that low prices are unsustainable and that we will gravitate no matter what to the price it takes to find and produce a new barrel of oil.

[Alan Cain]

Alan, beautiful vision, and real for the lucky few of us who have access to good land and water. However for the rest, the vast majority of suburban/urban dwellers will remain dependent on this collapsing economy. Your beautiful vision adds another dimension to this thread, which has become mostly just a slap fest with pretty pictures.

Thank you; I appreciate that. I think the world will simplify soon; I intend to try to survive. We won't be able to as lone wolves and our families are as always the fundamental unit of society. I don't know how rational it is to think things are going to be so radically different, but it wouldn't be the first, or the second or the third time.

We shall see. I really really hope that the peak optimists are right; but I doubt it down to the tips of my toes. My wife thinks I may be a bit extreme, but she either is humoring me beyond all reason or she has her doubts too. Of course she has a brain too; she is a CNM/FNP so her skills will be valuable regardless of what happens.

I think of the pretty pictures as denial, and unconscious rationalizing fear. As I said, it would be great if they're right.