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Top 10 at 10: Monster UK bailout; Gold record on Indian buy; Buffett's new train set; Dilbert
Here are my Top 10 links from around the Internet at 10am. I welcome your additions and comments below or please email your suggestions for Thursday's Top 10 at 10. 
1. (Another) monster bailout - I'm glad I'm not a UK taxpayer. Britain has just pumped another 31.3 billion pounds into Royal Bank of Scotland and Lloyds HBOS, Bloomberg reports.
The Treasury will inject 25.5 billion pounds of capital into RBS, for a total of 45.5 billion pounds, making it the costliest bailout of any bank worldwide. The government will fund about a quarter of Lloyds's 21 billion-pound fundraising. Both banks said they won't pay cash bonuses to workers earning more than 39,000 pounds this year.
2. He's blown it - Warren Buffett has used all his US$24 billion cashpile to buy railway group Burlington Santa Fe in what he called an "all-in wager on the economic future of the United States," Bloomberg reports. I'm beginning to wonder if the old codger has lost it. He is paying 18.2 times forecast earnings...
"It is Warren being Warren, taking advantage of a market that is soft at a time when the possibility for competitive bids is relatively low," said Tom Russo, a partner at Gardner Russo & Gardner, which holds Berkshire shares. "He looks at this as a business that has advantages against other forms of transportation." At $100 a share, Buffett is paying 18.2 times Burlington Northern's estimated 2010 earnings of $5.51, according to the average analyst projection in a Bloomberg survey. That compares with the 13.4 multiple for the Standard & Poor's 500 Index as of yesterday's close.
Rolfe Winkler at Reuters takes a dim view of the deal.
The cash flow characteristics of the business aren't very good. From 1999 to 2009, BNI poured 68% of operating cash flow back into capital expenditures. That's cash flow that doesn't go to shareholders. Nor are the returns fantastic. Because operating a railroad requires so capital, the return on capital employed is only mediocre. And the business is not without risk. High fixed costs mean railroads generate increasing returns during upswings, but decreasing returns during downturns.
3. Even Madoff didn't know - This is a fun fact picked up by Chris Martenson in a transcript of an interrogation of Bernie Madoff. It seems even he didn't understand Credit Default Swaps and neither did anyone else.... HT Gertraud by email.
Madoff noted that the industry is growing incredibly complicated. He gave the example of when his firm put up a credit default swap and didn't know how to do the books. Madoff said he didn't know, and it wasn't in manuals, so he called (withheld) He said he didn't know, but conferenced in another industry person, who told him to put it in his London office books. He said he called Merrill Lynch, Lehman Bros, five firms total, all of which didn't know. He said the NASD had no clue. Madoff stated that today, lots of trades are done off the books because people don't know what to do with them.
4. Gold surge - The gold price hit a record overnight after India bought 200 tonnes of gold from the IMF, Reuters reported.
The deal, which surprised traders who expected China to be the most likely buyer, will relieve the gold market of some uncertainty over how and when the IMF would sell 403.3 tonnes of gold, about one-eighth of its total stock. The deal will increase India's gold holdings to the tenth largest among central banks. It also fuelled speculation that other governments -- including Beijing -- may be ready to diversify their reserves even at near-record gold prices, helping soak up IMF supply that the fund may otherwise be forced to sell on the open market. "Central banks in India and China will be happy to accumulate gold at these levels. I will not be surprised to see even some Southeast Asian banks buying gold," Aaron Smith, Asia head of the $1.65 billion technical trading fund Superfund, told Reuters.
5. Meet the bloggers - Finally the US Treasury has worked out that financial bloggers are influential and has invited a few around for a chat, Yves Smith at Naked Capitalism reveals.
It wasn't obvious what the objective of the meeting was (aside the obvious idea that if they were nice to us we might reciprocate. Unfortunately, some of us are not housebroken). I will give them credit for having the session be almost entirely a Q&A, not much in the way of presentation. One official made some remarks about the state of financial institutions; later another said a few things about regulatory reform. The funniest moment was when, right after the spiel on regulatory reform, Steve Waldman said, "I've read your bill and I think it's terrible."
6. Titanic II - Renowned fund manager Jeremy Grantham from GMO has an interesting take on history repeating (or ryhming as Mark Twain said). HT John Mauldin at The Big Picture.
"I can imagine the company representatives on the Titanic II design committee repeatedly pointing out that the Titanic I tragedy was a black swan event: utterly unpredictable and completely, emphatically, not caused by any failures of the ship's construction, of the company's policy, or of the captain's competence. "No one could have seen this coming," would have been their constant refrain. Their response would have been to spend their time pushing for more and improved lifeboats. In itself this is a good idea, and that is the trap: by working to mitigate the pain of the next catastrophe, we allow ourselves to downplay the real causes of the disaster and thereby invite another one. And so it is today with our efforts to redesign the financial system in order to reduce the number and severity of future crises."
7. Gloomdoomboom - My hero. Marc Faber has a fresh newsletter in which he wonders why investors are so keen on bonds.
Since we had in 2008 the third best annual return (41%) in the last 35 years and since each time high returns were followed by negative returns I would be "” regardless of the economic outlook "” very reluctant to invest in long term government and also in corporate bonds. In fact, on a further deterioration in economic activity and amidst severe deflationary pressures (as postulated by the deflationists) I would be even more negative about US government bonds than under an economic recovery scenario. Why? Because further economic weakness (inevitable in my opinion) will lead to further fiscal stimulus packages and necessitate further money printing.
8. Rebalancing? - Beijing professor Michael Pettis is a close observer of what is really happening in China and his blogs (although a bit rambley) are well worth reading. In this one he questions just how much rebalancing from exports to consumption is really happening in China. He remains worried about protectionism.
The refusal of Asian central banks to permit the needed appreciation of their currencies against the dollar may end up having the same impact on the adjustment process of the overvalued currencies. The 1930s seemed to show, according to the authors, that when their currencies could not adjust, countries became protectionist. So if the overvalued dollar cannot adjust except against the euro, and if the already overvalued euro has to bear the brunt of any further adjustment, will American and European politicians be forced into the "second-best" option of trade protection? No prizes for guessing what I think.
9. Japanese template - Peter Tasker points out at FT.com that China is following a late 1980s style Japanese template of blowing up asset bubbles to unsustainable levels.
In reality, 1980s Japan was never going to be terminally damaged by weakness in export markets. Its current account surplus and strong fiscal position provided the macro policy leeway to make any slowdown strictly temporary. The Bank of Japan duly put the pedal to the metal and the recently deregulated banks went on a patriotic lending spree. High-end consumption boomed, but the real action was in the asset markets and capital investment, which soared as a proportion of GDP. Sound familiar? It should, because the same dynamic is evident today in China and some other emerging economies. What is truly scary is that the current frothiness of emerging markets, centred around China, may be only a foretaste of what is to come. For most of the 1980s, Japan, like China today, had used government direction of bank credit ("window guidance") to overlay monetary policy. It was the combination of banking deregulation and the G7-sanctioned surge in the yen that ushered in the final manic stage of the Japanese bubble. At its peak, the grounds of the Imperial Palace in Tokyo had a greater theoretical value than the entire state of California. By then there was no way out "“ asset market collapse and financial system wipe-out were baked in the cake. If China continues to follow the Japanese template, the end of the dollar peg will be the trigger event, setting off a Godzilla-sized credit binge. Why would China's rulers embark on a such a disastrous course? Because the alternative "“ unleashing deflationary forces stored up over years of mercantilist policies "“ would be too painful to contemplate. That was the choice made by Japanese policymakers, who had a hundred years' experience of managing a quasi-capitalist economy. This time a denouement would be one of the biggest bubbles in history, probably in scale and certainly in number of people involved. Could China weather the subsequent financial turmoil as stoically as Japan? It seems unlikely; at the least, its ascent to global hegemony would suffer a brutal interruption.
10. American lessons - Eric Crampton points Bill English in the direction of the results of Clinton's welfare reforms in the mid 1990s.
What have been the results? Large reductions in welfare caseloads, with the vast majority of welfare leavers transitioning into work. Illegitimacy rates dropped. The poverty rate among children with single mothers dropped substantially. The Index of Child and Youth Well-Being showed marked improvement.
52 Comments
"the current frothiness of emerging
"the current frothiness of emerging markets, centred around China, may be only a foretaste of what is to come"....wow....if this is indeed the pathway then commodities are set to be the bubble post the US Dollar and bond bubble collapse. India has seen the Elephant and opted for gold. The UK and USSA are flat out printing and Faber sees them raising the bar...either there is more shite heading for the fan or the fan will speed up, or both! Where do you hide your wealth?...cash or gold, property or food producer, metals or tech, govt bonds or effluent management(similar really) it's a tough old world. Maybe the answer is to pick the trends and ride the long waves to shore. China and India have to feed 2.5 billion people. All of them demanding 'western' lifestyle 'stuff'. Try to get your grey matter round the demand for electricity by a pop that size, with fridges and aircon, electric cars and all the communication systems. It's mind blowing. Imagine the value of a sheep fattening farm if lamb chops in China become the 'western' meat to eat.
Re#2: It appears that Warren
Re#2: It appears that Warren Buffett has gone all Jim Anderton on us. What is it with men of a certain age and trainsets?
NBR has Bill English firming
NBR has Bill English firming on changes to property taxation:
http://www.nbr.co.nz/article/english-continues-signal-changes-property-t...
--------Speaking on a TVNZ 7 programme, Mr English said there was a need for change.
"We will seriously consider changes in the taxation of property," he said.
"We haven't had those put to us yet, but I think the evidence that investment patterns in New Zealand could be more productive I think is pretty strong."----------
<i>Madoff stated that today, lots
Madoff stated that today, lots of trades are done off the books because people don't know what to do with them.
Unbelievable.... well, no believable. And the funniest thing - it is likely that Madoff, being the only financial sector scamster jailed so far over these questionably legal instruments and practices, is probably the guy who tried the hardest to find out how to account properly for the type of transaction.
Top 10 at 10: Monster
Top 10 at 10: Monster UK bailout:
"The neutralizing of England as a functional and identifiable nation is, in our view, essential to the EU because historically Britain has acted as a bulwark against the emergence of a single European hegemony. With Scotland 'firmly in the bag' and the Republic of Ireland the European Union's 'corporate welfare showcase' England cannot be allowed to act as a lone 'party pooper' (and defender of democracy and genuine free-market principles) at the new Empire's periphery. Where the historically courageous Welsh will ultimately position themselves is anybodies guess" - nzgold (October 2007).
What a surprise, on the day that The Lisbon Treaty is effectively 'in the bag' billions more in liabilities are loaded upon that long-suffering bulwark against European derangement. Soon there will be no legal recourse to allow the English people to escape from the illuminist nightmare being planned for Europe.
Bollard is succeeding (unsurprisingly) in
Bollard is succeeding (unsurprisingly) in re-flating the Auckland housing market - prices up 6% month on month:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1060...
No doubt he will come out with some pathetic nonsense - 'we are watching the rapid recovery in house prices with concern' - cue Tui advert.
Andy, can you explain that
Andy, can you explain that further please.
Bollard increasing the OCR in the previous bubbles di nothing at all to stop them.
The cost of borrowing is going up anyway.
Would it not be better to give Bollard (or any govt policy) better tools to control inflation or money availablity?
Novo - yes, there is
Novo - yes, there is no shortage of ideas, but see:
http://www.interest.co.nz/ratesblog/index.php/2009/11/02/anz-sees-more-p...
I wonder if he could do more with the liquidity rules?
I wonder why he didn't in the past?
''Bollard increasing the OCR in
''Bollard increasing the OCR in the previous bubbles did nothing at all to stop them.''
I must have imagined the 10% falls in property prices (late 2007 - end 2008) caused by the OCR hitting 7.5% around Sept 2007 then.
Bollard was far too slow in raising the OCR in 2005 onwards. When he finally got it up to a meaningful level it brought the bubble to a juddering stop.
Novo - "Would it not
Novo - "Would it not be better to give Bollard (or any govt policy) better tools to control inflation or money availablity?"
I agree, the OCR is a blunt instrument that hammers everything at once, or accelerates everything at once. AB can't pin down housing without knocking the wind out of exporters and businesses that have just set sail again.
I've always thought there should be a margin rate the RBNZ could set for property loans, perhaps even one for residential & one for commercial. That way the RBNZ could put the brakes or accelerator where they are needed, and probably much more effectively than any tax changes....
Not a bad idea from a "one eyed property bull" eh?!!......
Andy - I agree, but the RBNZ have a great track record of increasing interest rates too slowly and then leaving them high for too long....
Here's the latest from Tony
Here's the latest from Tony Alexander - whatever you think of his opinions.....
http://www.stuff.co.nz/business/industries/3029773/Watch-the-NZ-dollar-rise
He reckons, surprise surprise, house prices will..........can you guess.........RISE!!!
@Wally I've been trying this
@Wally
I've been trying this ratio : 1/3 Gold, 1/3 Cash, 1/3 Investments... Has not done me too bad these last 4 years.
Sorry, I meant CONTINUE to
Sorry, I meant CONTINUE to rise. As in, bubble gets bigger.
@9 Japanese template.....Do we really
@9 Japanese template.....Do we really think China cannot learn the lessons of Japan??
Are they really blind and stupid ?? (like the americans?)
I would postulate n he contrary: The Chinese knows the danger of a large surplus in their reserves....but their refusal to appreciate is due to their strategy of export push development (very like Japan's). Having accumulated vast reserves, (but not on a per capita basis) they are now in a position of facing pressures to revalue (to reduce their exports). Having seen Japan in the 80's and the resulting assets boom (and subsequent crash) from the rapid appreciation of the Yen, the Chinese clearly see the dangers of a rapidly rising Yuan. As it is, the asset markets in China is already in a bubble. If they appreciate the Yuan, it would just make the bubble worse.....not to mention marking down their own US denominated assets.
Is it any wonder then that we see the Chinese buying almost every resource assets all over the world (especially Africa) with their US dollar reserves? We can see clearly the Chinese strategy of buying in USD as fast as it builds up in their reserves....the final results....China owns lots of resources worldwide and the rapid appreciate in USD term of almost all hard commodities and precious metals.
@veedub Once again tony has
@veedub
Once again tony has demonstrated his uncanny ability to be 2+ years behind the trend curve forecasting the present. One thing is for certain if everyone is talking their book and praying the Kiwi rises. it has an 82% chance of crashing.
Present position: shorting Tony's paper.
In every article I read
In every article I read from the ever-smug TA he delights at taking a poke at poor Bernard and the others who presented good fundamental reasons for their price drop projections.
As all property bulls do, he quotes rising immigration and housing shortages (unsubstantiated) for ongoing price increases, never record low interests rates and easy credit from his paymasters. I don't think I have ever seen him try and refute the housing unaffordability argument - it is always supply being tight that will cause ever increasing prices. As an econmist I would have thought some examination of the relativity of price on demand, irrespective of supply might be worthy of his qulifcations.
But then again he works for a bank right???
Andy, I don't disagree he
Andy, I don't disagree he was slow with the only tool he had. However, I don't agree that the house price drop was caused (or any significant proportion) by the OCR - the world was falling apart by mid 2008 and confidence in most things went down. House prices were a part of this.
As other above suggested, there must be beter ways to control money flow?
Novo - just a sample
Novo - just a sample of ideas:
http://www.interest.co.nz/ratesblog/index.php/2009/07/16/opinion-why-the...
http://www.interest.co.nz/ratesblog/index.php/2009/10/23/opinion-why-new...
If there's gaming with the liquidity rule and it is effective on throttling credit, as some suggest, if it doesn't deal to our currency being traded approx. 120x our gdp (which gives the kiwi it's wings!) then it's failing us all, because it's failing the productive sector - which is what we depend on more than most countries to make our way.
Maybe another question for Dr B. on the 29th.
Oh ye of little faith
Oh ye of little faith , the great Buffett will make you eat your words . We are not talking about a clapped out Hornby train-set a'la Kiwi-Rail . He paid a premium price for an efficient and busy railway line . One eye on the future , as oil bounds higher , trucking gets costly , and train cargo comes to the fore . The Greens are right ( just not in NZ ) that railways are 14 times more fuel efficient than road trains . ......... . Goldmoney Sacks plunged 50 % in the months after Warren bought a chunk . And the howls of derison began , the old man has lost his mojo , knackers yard for you pal , lost yer touch ................ Today , those GS shares are nearly 100 % above what the sage of Omaha paid . " He's blown it " ? Get back to house price predictions , Bernard , Warren will wipe the floor with your prognostications ! Cheers .....Rogie
Look at Europe - these
Look at Europe - these days a gentleman always takes the train if possible. What we need is a return of the steam engine (huge efficiencies possible these days) and a new romantic age might be possible. Meanwhile all the global warmers can go by plane and feel guilty. Thomas the Tank Engine for Prime Minister!!
I could be wrong (
I could be wrong ( ?!) but there appear to be "two Martins" posting today. One the gold bug (above), the other the property bug ( other thread)...?
The very best pictures of
The very best pictures of our MPs doing what they do best. Enjoy.
http://images.google.co.nz/images?hl=en&q=pigs+at+trough+pictures&um=1&i...
Novo - it's like there's
Novo - it's like there's a 'Blog God' up there smiling down on us, happily unrestraining the debate, even today, as we blog:
http://www.interest.co.nz/ratesblog/index.php/2009/11/04/opinion-rbnz-ne...
@Andy: I think the term
@Andy: I think the term is sledge hammer to crack a nut....plus NZ is fairly unique in its preference for fixed mortgages, so trying to slow things down is very laggy and unpredictable. ie where in OZ they can guess say 6 months ahead, in NZ its a longer period....if the average is a 2 year fixed then there is no effect for 2 years and then it could be quite significant.
Criticizing AB in this situation isnt fair IMHO...try doing better yourself....He certainly reacted quickly once the melt down became clear but even Treasury was being overly optimistic with their worst case scenario....right now I think he's close to right....things could get better, or we could stumble....its sit tight time IMHO, lots of external events and some of them catastrophic have to either happen or go away....
regards
@Malcolm: Where do you get
@Malcolm: Where do you get this from? The steam engine isn't efficient by a long way....it has some particular advantages like high altitude operation but it costs more to maintain (it and the tracks) and run than a diesel/electric. Pro-global warmers simply dont fly....or take out carbon credits.....
regards
Roger said; <i>The Greens are
Roger said;
The Greens are right ( just not in NZ ) that railways are 14 times more fuel efficient than road trains
I'm curious, what makes NZ Rail's fuel efficiency so poor in comparison?
Narrow gauge tracks . Old
Narrow gauge tracks . Old tracks and rolling stock . Topography of NZ . Small population of NZ . Entrenched " union " mentality . Smaller cargo loads . Poor connections between pick-up points and download points .
What I'm curious about Roger,
What I'm curious about Roger, just relates to fuel efficiency, as opposed to bottom line profitability (e.g wages, demography etc). In other words, do we burn more fossil fuel per kilometre/tonne carried largely due to being narrow gauge?
@Steven -..........try doing better yourself…
@Steven -..........try doing better yourself"¦
Would love to matey, and I'd even forgo the multiple hundred thousand dollars he pockets every year.
Bernard/Alex - you might want
Bernard/Alex - you might want to update your deposit interest rate tables for Marac - they have gone 6% for 6 months deposit and 7% for 18 months.
@Kate: There are three things
@Kate: There are three things stacked against rail in NZ but these also apply to road.
The cheapest way to transport is the shortest distance ie a straight line and no change in altitude...Trains like straight lines....they lose energy on bends which must be re-added...they also dont like inclines, so the choices are re-route a long way to go round the incline, tunnel through it or re-route a bit, enough to keep the incline at an acceptable amount....Then the engine's efficiency....engines like to run at constant rpm, say 2000rpm but this has to be balanced against things like wind resistance...so at some point there is a sweet point. If you have long straight tracks you can run the engines at that sweet point for long periods of time....
Then rail gauges, the wider the gauge the more stable the train is, so it can go faster, but wider gauges cant do as tight bends, so there is a balancing act.
So say Paris to Berlin is 800km as the crow flies, say 850km actual....in NZ in order to got from Wellington to Auckland which is 800km you actually do 1200km so its considerably further, so that's one large loss, then lose energy on bends and have to accelerate and brake more frequently and inclines, loss 2 and run at a far speed for less time less efficiency, loss three. All this also means more wear and tear, so more maintenance, loss 4.
regards
@Andy H: go for it,
@Andy H: go for it, predict where inflation will be every 3 months for the next three years.....print it here, lets see how you do.
regards
Is the India gold deal
Is the India gold deal a sign of the flight from the Dollar?....yes. So there you have the best indication of where things are going. Word is out that the European countries with large gold reserves will not be selling. That China is pissed at missing out on the IMF gold. Sure seems to point to the rise of the yellow stuff as a hedge against the Dollar and other crap currencies. How much gold do we have inside the RBNZ vault, or is there just a piece of old cheese down there?
Gold production in China is
Gold production in China is amongst the world's largest . Why should they weep into their noodles over the India gold deal ? As for NZ , most of our recent gold production has come from the Olympic rowing team .
errr Steven - you wanted
errr Steven - you wanted me to say whether rates should move or not - the answer is yes they should be going up and if I was in Bollards place thats what I would be doing.
Free prediction - inflation will be above the Banks upper ceiling of 3% within the next 15 months - so Bollard will have failed again to fulfill his mandate (as he did in 2007-2008)
@Harriet A property bug? me???
@Harriet
A property bug? me??? lol. couldn't be farther from the truth. And I'd hardly call myself a gold bug either.
@steven - thanks - very
@steven - thanks - very informative. But interesting that you also suggest the same fuel (in)efficiency factors are true for road transport.
I am just curious - if, as Buffet has bet, the world is heading for significant commodity (oil) prices rises in future, whether the fuel efficiency argument for rail that he has 'bet' on would also likely apply here.
This National Government is pouring billions into roading - they have named a number of new roading projects as 'Projects of National Significance' - I assume so that they can take advantage of the changes to the RMA which by-pass local hearings on roading resource consents. The Wellington to Levin expressway being one, for example.
I wonder if they are trying to increase the fuel efficiency of road transport (less braking, more direct paths etc.) so that it might be able to continue to compete more successfully against rail in to the future?
Roger Thompson The weight lifting
Roger Thompson
The weight lifting team would be more use than the rowing team seeing they would need to lift 16.274 tonnes.
http://www.crownminerals.govt.nz/cms/news/2009/nz-gold-production-highes...
Its a smart move by
Its a smart move by Buffet because he already has a model of what will happen.
18 months ago when oil when to USD150, as part owner of the railway, he will know how the economics of rail v road stack up.
With the US dropping and oil going up (in USD) now is perfect timing to buy the company.
The really fast trains are electric so the efficiency of the engines doesn't really matter. If you want more power (within design limits) you just suck more power out of the power network. That is why the PN to Hamilton line is electric.
@ Kate - the Puhoi
@ Kate - the Puhoi to Wellsford expressway is another. Expected cost $2 Billion!!!!!
Clearly Northland is about to awake from it's slumber and take the lead as an economic powerhouse. There is another theory about this road.... it has to do with a certain transport minister living in the area and a PM with a bach at Omaha Beach.
I am quietly outraged.
On a slightly different topic,
On a slightly different topic, I saw this article last night on how safe are American Bank's safe deposit boxes.
http://www.marketoracle.co.uk/Article14722.html
"The 50 U.S. states are holding more than $32 billion worth of unclaimed property that they're supposed to safeguard for their citizens. But a "Good Morning America" investigation found some states aggressively seize property that isn't really unclaimed and then use the money -- your money -- to balance their budgets."
How long before the peasants revolt?
With the current issues surrounding
With the current issues surrounding fossil fuel transport I predict Buffet's train set will end up a better deal than NZ taxpayers money being used to buy up the washed up assets of Shell Corporations petrol distribution chain, especially considering that they control the very thing that they can use to bust our nuts after we cough up the cash. I only say a mistake is a mistake once, maybe twice, after that its got be called a pattern, and it aint no mistake, someones on the "take".
I also predict that Infratil will end up making a killing privatising the profits, whilst the taxpayers will end up once again with the gearbox full of banana skins.
Iain --I think Infratil and
Iain --I think Infratil and co are more interested in the share of NZ Refining and few other bits. I'm picking they will sell off the Shell petrol stations to investor/owner operators like they were before ( and they will be in better hands that way) But if they do then buyers should insist on some sort of set margin on whloesale petrol prices, so they don't get screwed again
Listen please, but not only
Listen please, but not only 5 minutes:
http://www.youtube.com/watch?v=31NDaGgK584&feature=channel
I say that again, it is about time for visions, working together rather then banging heads and/ or find all sorts of excuses, before it is too late - remodelling our economy.
Walter
Iain, agreed. Huge mistake to
Iain,
agreed. Huge mistake to get into the oil business via refineries or retail, these are models at or past their peak and will be under increasing pressure from all fronts - volume and margin, do you think shell oil are stupid.
Why the hell are we not investing in actual ownership of what will literally be black gold. Our top priority? We need to be in oil production, nat gas powered transport fuel and renewable electricity all owned and funded by kiwis.
interesting piece on China http://www.ft.com/cms/s/0/78e2eae4-c7
interesting piece on China
http://www.ft.com/cms/s/0/78e2eae4-c7af-11de-8ba8-00144feab49a.html
Good points , Iain .
Good points , Iain . Shell is a professional multinational in this field . So why are they exiting ? David , too . Taxpayers money ( stolen by Cullen ) is going into bowsers , the retail end ! There is a stake in NZ Refining too . But gee whizz , why go in , where the insiders are bailing out ! ( warning here to anyone contemplating Kathmandu shares , insiders are completely selling out , beware )
@kate: "I am just curious
@kate: "I am just curious "“ if, as Buffet has bet, the world is heading for significant commodity (oil) prices rises in future" This isnt a bet IMHO...its a certainty, its just when.
"whether the fuel efficiency argument for rail that he has "˜bet' on would also likely apply here."
Yes....hence why I liked the Labour Govn's buyout, though Im not sure if they did it for the strategic reason I / Buffet see..ie efficiency ~ cost per tonne per km. For NZ the biggest plus is you can electrify a rail track....you cant do road transport...what I do expect is more hydro...from the RMA dismantling, at least thats what I hope for.
"This National Government is pouring billions into roading "“ they have named a number of new roading projects as "˜Projects of National Significance' "“ I assume so that they can take advantage of the changes to the RMA which by-pass local hearings on roading resource consents. The Wellington to Levin expressway being one, for example."
This is to my mind not about efficiency but about keeping un-employment down in the construction industry...while we have this downturn and hence that construction money flows into the greater economy.
"I wonder if they are trying to increase the fuel efficiency of road transport (less braking, more direct paths etc.) so that it might be able to continue to compete more successfully against rail in to the future?"
Nope....the changes are too hard and dont give a payback IMHO and National are a bunch of second rate accountants ie they can only cut and not grow the top line as Selwyn(?) said....its for the reason I see, to stimulate our economy...keep jobs....
This tends to where I and the Green's (and I am/was a Green party member) part....I accept that we need energy for business and ppl but we need renewable energy and not fossil. That hydro will do some damage to NZ flora and fauna it has to be accepted though minimalised the Greens seem to want it both ways....its that or build coal or gas generation which doesnt do specific but overall damage and a greater damage...or not do it.....NIMBYS should eb shot IMHO...because I see it as an imperitive...we have to look after energy security...if we start to get brown or blackouts thats going to impact us and badly....its plain stupid to allow us to get to that point...so Hydro has to be done.
regards
Thanks again, Steven. Given we
Thanks again, Steven. Given we need to improve/develop so much other infrastructure (sewerage treatment, stormwater, rail electrification, electricity grid upgrade etc etc) I still can't figure why they would be directing their energy and our money into roads.
Trains win because they have
Trains win because they have - as Steven said - gentle gradients, and corners. They also benefit from steel-on-steel which beats rubber-on-road hands-down. The energy lost every time the tyre deflects at the bottom is quite significant - typically dissipated as heat.
Then there's diesel-electric, which (as Steven says again) allows the diesel to operate at optimum revs, while a 90% efficient electric motor is the interface. Beats a road-runner gearbox every time.
Then there's other issues which get ino a debate with denialists - bitumen is a proportional product of the catcracking process, and oil is at or past the Hubbert Peak.
Too make such products is possible from coal or lignite, but the ERoEI (energy retirn on energy invested) is so poor that it ain't worth doing. That is irrespective of the dollars involved, you understand.
Coastal shipping probably beats it for NZ, by they are complimentary really.
You have to see the backgroung energy supply constraints to see it's worth, and a lot of folk base their optimism about other things, on their lack of understanding of that game.
Sorry for the late input - I was at the Centre for Energy Research conf yesterday.
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