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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 09:24 AM   #101
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

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Congress has a tendency to postpone problems whenever it can. *When the crunch comes, Congressmen of the time may very well decide to postpone the problem for someone else's future term in office.
That is exactly right. Politicians have a "planning horizon" that coincides very closely with their term of office. But this is a democracy, and they only stay in power because a majority of us voters put them there.


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Thanks Ted. Just two points and I will be quiet with my Polyanish view:
1) Natural resources are helpful but not at all critical in economic growth. Look at Japan (overlooking current fiscal issues). Energy can come from alot of sources, which leads to point two:
2) All technological breakthroughs were unforseen, so I certainly wouldn't count them out.
Please don't be quiet with your views because you certainly have some good points, and I don't entirely disagree.

I would argue that certain natural resources are critical to economic growth, especially when the infrastructure of a nation has become dependent on them, the way that all industrialized nations are heavily dependent on oil. To get those natural resources, a country does not need to have domestic supplies, but does need access to foreign supplies. The major cause of Japan's aggression in the Pacific during the 1930's and 1940's was its perceived need to guarantee access to oil and rubber. The effort of the U.S. to block this access, to punish Japan for its aggression in Manchuria, Korea, and China, was the motivation for the Japanese to attack Pearl Harbor and Bataan.

We most certainly still need crude oil. Even if we succeed in maintaining access to the major reserves in the Middle East, oil is going to become increasingly expensive as existing reserves diminish and the demand for it in countries like China and India explodes. Sure, we will develop alternatives, and I advocate that we mobilize market forces to accelerate that process by shifting taxes onto crude oil. But barring any unforeseen technological breakthrough, those alternatives will necessarily be more expensive -- meaning that fewer resources will be available for producing everything other than energy.

While I agree that most technological breakthroughs are unforeseen, I think that all such "progress" is ultimately subject to the "law of diminishing returns." For example, in communications, we have progressed from letters carried on horseback over mud roads in the 18th century, to the telegraph in the 19th Century, to the telephone in the early 20th Century, to the Internet and cell phones today. Well, maybe there will be smaller cell phones invented, that can be embedded in a person's head (like my daughter's cell phone already seems to be). But how much additional value will that actually add? And so on in every functional area.

I'd would say that the greatest potential for productivity gain in the future is not in the area of technology, per se, but rather in solving the socio/economic challenge of elevating the "underclass" to become productive members of society.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 10:09 AM   #102
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

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Hey Ted! *Re. "equally irrational responses", you have
regained some esteem here.
The way I regained esteem was by suckering you and your fellow gun nuts into criticizing my moderate position on ownership of firearms that arguably is highly consistent with the letter and original intent of the U.S. Constitution.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 10:17 AM   #103
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

The alternatives perspective isnt very sunny (cough) either. I'm hoping for some technological resolution, but the odds dont look great.

The oil reserves appear to have a 25-50 year life. The range dependency is more based on how much we cut use vs how much is available. While one could argue that more and larger reserves could be found, its equally easy to argue that most of the larger, accessible resources have been located and it would be a longshot to find a "middle east" sized reserve. Some point out alaskan and former-soviet-union fields that havent been tapped yet. The most optimistic assumptions for those fields would last us perhaps a year, maybe two at current consumption rates.

Solar? Doesnt work at night, works badly in the winter, even with huge improvements it wouldnt be satisfactory in northern areas.

Fuel Cells? Need something to run on. Hydrogen doesnt grow on trees. Most of our current processes to separate hydrogen cost more than the benefit the fuel provides. Even with a huge improvement in efficiency the demand is very large and replacing the rails, trucks, personal vehicles, furnaces and whatnot would take more than 25 years if we started today. More conservative estimates for design, construction and replacement cycle of products that would replace our petroleum demands is 40+ years.

Hydro is good, but limited. Less than 5% of our requirements can be met by hydro.

Nuclear fuel if replacing a small portion of our oil and gas usage would quickly expend our available nuclear fuel and where the heck are we going to put the spent rods and where do we recycle the containment systems when they expire?

Wind works, but most areas are not in beneficial locations to make it work and even heavily populated windmill farms cant produce more than 5% of our power requirements.

Biomass is promising, but converting all our farmland into biomass production would supply roughly 20% of our current petroleum energy requirements.

Further, farms operate on chemicals that require petroleum to produce. Most farmers predict it would take 5+ years to wean their fields from the current products and replace them with something else...whatever that might be. In the meanwhile the food production during those 5 years would be substantially less.

Lastly, converting our existing oil, gas and coal reserves to their end state products (gasses and polution) leaves us in a fairly unpleasant situation with regards to global warming, water and air polutant level.

In short, a likely scenario is that within 40 years we'll have no airplanes, no cars, no single family homes, will grow our own food and produce our own local energy. This after mass starvation and loss of life/quality of life from extensive pollution.

The good news is that sort of cuts down on the time frame for firecalc runs.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 10:29 AM   #104
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Ok TH, so to imagine a step on the way there, lets imagine a point at which the fuel costs are 10x or even 100x what they are today. Now put your mind to work on the implications on you and the opportunities for alternatives and innovation. A huge financial incentive appears, and our history shows that people will rise to the challenge when such incentives exist!!

I have faith in our race; without such an incentive, little will happen but with it lots will. Even solar becomes effective, and with that kind of incentive will improve (although that may not be the solution...who knows).

Wayne
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 10:53 AM   #105
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

I'd bet on solar long-term. A billion years of evolution is a pretty good process for selecting elegant, efficient, and robust solutions to problems. Photosynthesis is about 90% efficient, is clean (typically consumes CO2 and produces O2), and plants and bacteria happily use it every day on every square micrometer of the planet.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 02:06 PM   #106
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Very long term, it can be argued that oil and coal are solar....
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 02:15 PM   #107
 
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Hydrogen is clean, renewable and doable. It only needs economy of scale right now.

Oil companies will fight it. (In other words the current administration)
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 02:25 PM   #108
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

How is the hydrogen produced? I would assume it takes energy of some kind.

Wayne
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 02:41 PM   #109
 
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Hydrogen is an element and occurs naturally on Earth.

It can take energy to separate it from various places such as water. This has been proven to be more efficient than refining gasoline.

Could be the same source as refining Gasoline or Solar or ?

It's just economy of scale.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 03:17 PM   #110
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

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Hydrogen is an element and occurs naturally on Earth.

It can take energy to separate it from various places such as water.
I know this is off the subject, but fun to talk about.
As Cut-Throat says, H2 can indeed be formed by breaking down water. It can be done thermochemically (through use of heat and chemical catalyst), or with through electrolysis. Currently, I believe it is most commonly achieved through the use of heat and therefore utilizes fossil fuels to produce the H2. Although many argue that H2 is a cleaner burning fuel and thus is more environmentally friendly, the production method to produce the gas is not.
I would suspect if H2 fuel does indeed take off, we will see an increase in nuclear power to accomodate the process rather than the use of fossil fuels. Of course, we first have to overcome all the logistical problems associated with storing and fueling with H2.
Of course it is impossible to see the future, but my bet is on an an increase in the use of nuclear technology in the future in some form.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-08-2004, 04:12 PM   #111
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Boy are we straying far afield from the topic, but perhaps its nearer and dearer than a quick read might indicate.

There *are* some financial opportunities in owning energy producers over the next 15-25+ years. And perhaps rethinking long term investments in todays "emerging markets" as those may be whalloped by a drop in cheap available energy. Inflation proof investments a la TIPS. Owning high density housing in warmer climates

As I mentioned, the methods to make hydrogen in bulk at this time cost more energy than the hydrogen produces itself, and uses fossil fuels for the most part. A process that creates hydrogen with a net zero sum or better? Would be pretty cool and I'd want to own stock in that company, but for the forseeable future its a little like cold fusion or the perpetual motion machine.

Again, solar has some promise but even at extremely high efficiency that doesnt exist yet, and at a signficantly lower cost than today thought possible, half the people in the world live in a place where there simply isnt enough sun for part or all of the year for it to be feasible.

Plus you cant make solar and hydrogen into medicine and fertilizer, or fly an airplane with it.

The real point isnt all this though, its the realization to reaction time ("catching us by surprise") and the implementation time. If we started *today* we'd still go through a period of time where the fossil fuels for some or many portions of how our economy operates will become unfeasible for a period of possibly many years.

Right now I dont see a lot of attention to getting started, hence some element of "surprise" is probable and the oil folks are sure as heck going to make sure we dont start weaning ourselves off the morphine any sooner than is necessary.

If you think this is alarmist, read this quote from a report I read recently. Not a certain turn of events, but an eye opener:

"So what might we realistically expect to happen when petroleum begins to dry up? International oil import costs will climb sharply, increasing global competition for dwindling oil available from five Middle-Eastern countries and the former Soviet Union. National debt will rise, and inflation will also likely follow as money flees the country to oil producers. Money will become scarce (even as the government prints more money to pay overseas energy bills) while interest/mortgage rates will rise. Businesses will go broke paying higher energy costs. Poverty will become pandemic. Pensions for the aging population will be in jeopardy. Of course, these effects will be modulated somewhat by geography, as has been noted by analyst Graham Zabel (a contributor). Of all geographical regions, Europe has the best chance to succeed in the face of the coming oil crisis. Europeans' per capita energy consumption is already one-third that of North Americans'. Their public transport and rail networks are much better, and their energy policies are more forward thinking, perhaps due to their lack of significant fossil fuel resources. Europe is closer to the natural gas supplies of Russia, the Middle East, North Africa, and the Mediterranean, and access to gas supplies may give Europe a longer time cushion then America to extricate itself from fossil fuels. It will be much easier for people there to function with bicycles and public transport than it will be in suburban America. In Europe, populations have stopped growing and are actually shrinking. Forest cover is expanding. America's trump cards are wealth and weapons. But America is addicted to energy and consumption and will face a more violent withdrawal. It also has the fastest growing industrialized population.

Of all continents, Africa will be hardest hit. There, populations will fall drastically and society could revert to a high-tech tribalism. Meanwhile the multinationals will rest offshore, draining the continent of its oil and gas while paying the local ruling tribes protection money. A Middle Easterner should also be very pessimistic. The region has the second highest population growth rates in the world (after Africa), large numbers of young, educated, underemployed men, few educated women, severe water problems and apart from oil and gas in some cases very few natural resources. Unfortunately, these problems are not so self-contained as Africa 's and they are likely to spill into other regions (mostly because of oil). Latin America's and Asia's hopes lie somewhere between those of Europe and America on one hand, and Africa and the Middle East on the other, though probably closer to the latter. The most sobering view of the post-petroleum world comes from Jay Hansen, the moderator of : The dependence of industrial agriculture on fossil fuels, the declining fertility of the land, and the positive feedbacks imposed by declining net energy will force the economy to divert much more investment into the agriculture and energy sectors as part of a desperate attempt to maintain agricultural output. Government budgets must also decline in real terms as greater and greater fractions of the economy are diverted into the resource sectors. As resource quality and land fertility continue to fall, society will be forced to allocate more and more capital to the agriculture and resource sectors, otherwise the scarcity of food, materials, and fuels would restrict production still more it's circular, there is no way to avoid the positive feedback."
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-09-2004, 10:05 PM   #112
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

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If you think this is alarmist, read this quote from a report I read recently. *Not a certain turn of events, but an eye opener:
TH, could you give a link to that, or a reference if it is not online?

Thanks, Mikey
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-10-2004, 08:10 AM   #113
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Most certainly. This was drawn up by a old friend and his full writeup contains quite a bit of reference to the materials and people he discussed to write this. The "solutions" seem pretty liberal and unlikely from my perspective...as I told him Americans will go down in flames in their SUV's.

The really fun part is that you would more expect to find Mark riding on the hood of a truck, pistol in one hand and a bottle of whisky in the other than writing about conservation

Here's the gist of it

http://www.petry.org/markp/sustain1.htm
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 06:37 AM   #114
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

I'm happy to see so much intelligent analysis of the energy problem that the U.S. and the world is facing.

I think that the U.S. will be able to adopt to the declining availability of fossil fuels without a drastic "crash" in its standard of living, if only we have the political will to do what the Europeans have been doing for some time -- place a heavy tax on oil that (1) encourages people to voluntarily make purchasing and lifestyle choices that have low energy requirements, and (2) allows taxes on everything else to be less than they otherwise would be. (The fact that European countries have higher taxes on income and wealth is caused by their overly generous unemployment and retirement benefits.)

What I see happening is that Americans will eventually be induced to make changes that are technologically possible now -- such as switching to smaller cars powered by hybrid engines. Eventually, these engines may be powered by propane or hydrogen. Hydrogen can be produced on a large scale by hydrolysis of water, which is a simple process that could be done in any home. But the efficiency of the process is necessarily limited by laws of chemistry and thermodynamics that dictate that some energy will be wasted in the conversion.

For the foreseeable future, electrical output could be sustained and expanded through a mix of conventional nuclear power and wind energy. An interesting thing is that the Great Plains is the area of the country with the greatest potential for wind farms, and this "radical environmental" technology is actually being applied in such politically-unlikely places as the Texas oil patch. The fact that wind generators only produce energy when the wind is blowing is not that much of a problem when they are connected into a grid that includes hydropower, which can be turned off to store energy when the wind is blowing and turned on to release it when the wind stops. It might also be feasible to use the wind power when available to generate hydrogen, which would be stored for times when the wind was not blowing.

The underlying concept is that the best mix of technologies should be determined primarily by the market -- not by politicians in Washington trying to decide how many miles per gallon of gasoiline the average car should deliver; or whether it should run on ethanol, or soy diesel, or methane produced from cow manure; or whether people should live in houses heated by natural gas, or electricity, or solar energy; or whether they should live in small, densely concentrated housing units or large, dispersed ones involving higher energy costs. And the sooner that taxes are imposed on oil that accelerate these changes, the less traumatic they will be to the economy of the future.
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 07:25 AM   #115
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

I don't understand how the Europeans live so well. Their taxes are so high, their gasoline costs are so high;
do they make more money than us ?
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 10:03 AM   #116
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Only a few (small) European nations have a higher GDP per head. The fact is that they (we) live on less money because we spend less on consumer items. We pay more for energy but use a substantial amount less. The shorter travel distances help as well. Also for most European nations college education is cheap compared to US because it is subsidised by taxpayers. The welfare policies are beginning to catch up to a lot of aging nations in Europe and things are going to change here soon. Higher taxes and lower social security are just one way.

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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 10:32 AM   #117
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

My experience travelling to other countries is they do not have what we call necessities which are really luxuries. Many do not own an auto, have internet access or cable tv or wear Nikes. Many walk to the grocery store or ride a bike. These are major expenses they avoid (whether by culture, availability or choice).

When I was in Australia about two years ago gas prices were very high but food was cheap. Maybe they are doing was Ted was talking about with taxing fossil fuels heavily.

-Jay
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 10:56 AM   #118
 
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Hello Jay! We don't have cable tv or wear Nikes either

Re. SWR, frankly I think one of the reasons I have not
spent more time on this (other than laziness) is that
things have worked out so well for me. I have certain style standards which prevent me from going too far
down the yellow brick road of frugality extremes.
Even so, my net worth since 1998 (when I fully retired)
is up about 30%. And, I'm doing this without any pension, no provided health insurance, no IRA drawdown, no SS or inheritance money. I do have a working
wife which of course is an enormous boost. Still, it has
worked out much better than I anticipated.

BTW, by careful shopping I am still able to sustain a 3%
APY on totally liquid FDIC insured funds.

John Galt
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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 11:00 AM   #119
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

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Hello Jay! *We don't have cable tv or wear Nikes either
Me neither... although I do have a pair of Nikes that I bought seven years ago & still wear quite often. I feel guilty for having bought them so I'll probably have them 15 more years to make the purchase feel worthwhile.

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Re: SWR, terminal values, TIPS, I-bnds & comm pape
Old 02-11-2004, 11:26 AM   #120
 
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Re: SWR, terminal values, TIPS, I-bnds & comm pape

Now there is the advantage to buying sneakers at Walmart. If they start looking less than fresh, you can throw them out or use them to cut the grass and buy new, with no angst whatsoever.

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