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| Tue Jul 1 23:00:35 2008 Near Miss |
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| Mon Jun 30 23:18:26 2008 Seizing up again |
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| Tue Jun 24 22:04:19 2008 Gas Prices |
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| Tue Jul 1 23:00:35 2008 Near Miss The one that almost got us... |
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| I was just reading through the 26 June edition of
Nature. There are usually a few interesting tidbits in every issue. This issue
focused on "Cosmic Cataclysms": particularly impacts.
There was a good story on the Tunguska blast of 1908. I had recently read that Lake Cheko could be the remnants of the impact crater. Soundings had indicated a curious impact-shaped dimple at the bottom of the lake, and a follow-on visit was planned to look for meteorite debris at the bottom. However, the Nature article didn't think highly of the Lake Cheko theory. Another article, "The Burger Bar that Saved the World," was excellent. It talked to a group of long-time asteroid hunters that had started searching for near-Earth asteroids in the 70's, and they had a 30+ year perspective on how asteroid hunting had changed. Certainly the technology has changed a lot! And the idea that impacts were common on Earth was new. Many of the scientists claim that it was Alvarez's theory about the impact that killed the dinosaurs that really woke people up: here was proof that a rather small impact had decimated life on Earth. The article was a good read. It interspersed comments from several scientists to give an overview of how the field had evovled. But I was shocked by comments by Clark Chapman about a near-miss in 2004. He writes: In 2004, an object was discovered ... and the nominal calculated orbit had the asteroid hitting the Earth the next day. ... [JPL] concluded that there was something on the order of a 30% chance that this object would hit the Earth during the next three days. He noted that the European and North American observatories were desperately trying to observe the object to get better data, but weather was bad over both continents, and no one could see it. So we were debating late into the night, at what point should we go public with this? Wow. As it turns out, later observations revealed that the object was larger than originally thought, but also farther away. And so the collision chances dropped to around zero. But regardless, there was a period of a day or so when the world's leading experts thought there was a 30% probability that an asteroid would hit the Earth. Rusty Schweickart has since started the B612 Foundation (named after the asteroid in Saint Exupery's The Little Prince) which is attempting to establish protocols for engaging the United Nations and other bodies when an impact is deemed imminent. So sleep soundly, but not too soundly. Comments Loading comments...
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| Mon Jun 30 23:18:26 2008 Seizing up again The Fed confirms what I already said... |
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| Friday there was a
Yahoo story about the
Federal Reserve's moves to shore up Bear Stearns.
If you read my May 28 blog entry then you already know the story: the Fed felt it had to move because the entire investment banking industry was on the verge of collapse. The article was based on recently-released documents "providing insights into its private deliberations." The documents pull no punches, saying they feared an "immediate failure" of Bear Stearns, and such an event would cause an "expected contagion." I thought the "documents" were minutes of the meeting. They weren't, at least not verbatim. The Yahoo story didn't reference them, but I found the minutes on the Federal Reserve website. I was hoping (naively) for transcripts of the discussions. Instead, these are just bullet summaries, written after the fact (the documents reference other events that happened on April 1, for instance). So the "minutes" had the benefit of being written with considerable hindsight. My take on these? They are intended to support the Federal Reserve's decision to bail out Bear Stearns, and don't provide much insight into the decision making at the time. I don't think the Federal Reserve's documents are propaganda, but they have to be questioned. On the one hand, you can see that Reserve members were worried about a general collapse. On the other hand, a cynic could wonder if they were going out of their way to help a few investment banks that didn't deserve to be saved, and they are still trying to defend that decision. It is very clear that the entire banking system was not primed to collapse. There were a number of investment banks who were vulnerable, but any banks in that position deserved to fail. If a general "contagion" really developed, the worst that could happen is that investment banks would have a run on their funds. Don't get me wrong, that's pretty bad, but it would remind those who invested money there that those banks are not guaranteed. Of course, it is possible that by allowing commercial and investment banks to merge, the US has created a situation where instabilities in (poorly regulated) investment banks can jeopardize our (taxpayer-guaranteed) commercial banks. If that is true, then the solution is to force commercial and investment banks to stay separate, not to guarantee investment banks. If we've leared anything from the subprime mortgage mess, it's that investment banks are fraught with risk. After all, that's the path to higher returns. The solution is to make sure investors understand the risks, rather than pretend we can control them. Comments Loading comments...
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| Tue Jun 24 22:04:19 2008 Gas Prices They will just get worse... |
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| In my
March 26 blog entry I made the amazing prediction that gas prices would reach $4.50 per gallon
"before 2010." Well, I was right! Although I wasn't expecting it to happen
so quickly.
Today, I read a story on Yahoo that claimed we should start seeing lower gasoline prices "someday." In particular, they noted that high prices were causing a drop in demand in the US and China, Saudi Arabia was increasing supply, and Iraq was also beginning to increase supply. Great! But I still don't think we'll see lower gas prices anytime soon. For one thing, it does take a while for supply to come down. I predict US gasoline consumption will drop by around 20% between 2006 levels and 2010. But it will probably take 2 more years, since that's how long it took in the late 70's and early 80's for people to change cars, housing, and habits after the 1970 oil shocks. For another thing, gasoline prices still haven't caught up to oil prices. Crude oil prices have risen from around $11 per barrel in June 1998 to over $130 per barrel in June 2008 (see the historical prices at the US Energy Information Administration). That's a 12x increase in 10 years. Meanwhile, US gasoline prices have jumped from $1.10 per gallon in June 1998 to $4.13 per gallon in June 2008. That's a bad 4x increase, but only 4x. Gas prices haven't caught up to crude oil prices! Partly that is because crude oil is only part of the price of gas. But it is also partly because gasoline retailers aren't passing along the full costs of the gas. Even with the higher prices, many retailers are still selling at a loss! So I think it is reasonable to expect gas prices to rise another 25-30% in 2008. I'll make a new prediction: gas prices will reach $6 per gallon in the US before the end of 2008. And I think we'll never see gas prices below $5 per gallon again. There is a chance I'll be proven wrong in a year or so, as demand comes down temporarily. But once production declines begin, gas prices will really skyrocket. Comments Loading comments...
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