Here's my summary of the key news overnight in 90 seconds at 9 am, including news the Chinese central bank is making an effort to stabilise credit markets.
The statement it issued late yesterday helped calm the nervous market conditions that it was partially responsible for. It said it is still the lender of last resort, will provide liquidity support to banks that have temporary funding shortages and will apply measures to maintain the stability of money markets.
The tone of the statement marked a clear contrast with its previous comments, where it stressed that the onus was on the country's largest banks to stabilise the situation. Credit markets rallied on the news, though credit spreads still have a long way to go to recover all of the ground lost during the recent turmoil.
In the US, house prices are rising, durable goods orders rose more than expected in May and a gauge of planned business spending increased for a third straight month, the latest signs of a pick-up in American economic activity.
As a result, equities are higher in mid-day trade in New York, oil is lower, gold is holding at low levels, but most other commodities are up. The big exception is for natural gas prices, which have plunged almost 2.5% over the past few hours. Not sure why yet.
A new threat is emerging for big international banks from the recent surge in bond yields. Banks have built giant portfolios of liquid securities, partly at the behest of regulators and also because they have not found better opportunities to lend a flood of deposits. Rising yields are decreasing the capital value of these holdings. Under new Basel capital rules, unrealised losses in these 'available for sale' portfolios will hit banks’ equity capital hard.
The NZ dollar starts today at 77.4 USc which is about a one year low, 83.5 AUc, and the TWI is at 72.96 and that is its lowest level since November 2012..
No chart with that title exists.
6 Comments
Obama's announcement is bigger news - interesting you didn't mention it. Ryan has just done a piece on Nat Radio, but she (predictably) dropped the ball. Apparently EROEI is a difficult concept for some to grasp!
He's just raised the price of coal in the medium term - meaning the price of electricity in the US and in Australia, relative to alternatives. He's also - via sequestration attempts and via the shift to alternatives - driving things down the EROEI ladder, so available energy decreases. That means economic contraction, sorry foks. Expect much resistance to that.
His announcement should have put gas up, not down. Everyone got on the bandagon, of course, and we have a temporary glut of supply, so some outfits will go to the wall and be fire-saled. That was never going to be permanent:
There was an interesting piece on the US fracking industry, its really the latest speculative bubble. Right now the smaller companies are selling themselves to the bigger ones at inflated prices, dodgy comes to mind. The likes of the vampire squid are happy of course, lots of fees for them. The big guys get "assets" which hide the decline in their reserves, the small guys get out without losing too much of their shirt....the shafted are the punters....great game....really...
(not)
EROEI is not difficult to grasp, I think its fear, ppl start to think, join the dots and then panic and the shutter comes down...for the brighter ones anyway...
regards
Why introduce an artificial proxy into an absolute supply-available question - unless you have a need to obscure the issue?
Yes, it will impact $ - not as many opportunities due to a lesser supply of grunt; but the supply of $ will impact the EROEI descent not one jot. My lecture analogy is a wolf chasing a rabbit - if the energy returned from the eating of the rabbit is less that the energy expended in the chase, the wolf dies. There can be a thousand rabbits, the wolf still dies. The wolf can be a billionaire, the wolf still dies. How hard is it to understand?
"Meanwhile, the industry must still service high levels of debt due to excessive borrowing justified by overinflated projections:
"... leases were bundled and flipped on unproved shale fields in much the same way as mortgage-backed securities had been bundled and sold on questionable underlying mortgage assets prior to the economic downturn of 2007."
JB, this inability is for some ppl as they only think in terms of money, in-variably the right wingers....and this is a fundimental failure, I cant help that but try and explain yet again.
Think of it as barter, so swap a real thing for another real thing, but we have slipped a medium of exchange IOUs in between.
Ask yourself, what is money? I mean its a piece of paper or 1s and 0s (electronic) that represents what?
I suggest that its an IOU for future work. You work today and get a piece of paper that in the future you can swap for a good. That good is either energy, or something that takes energy to make and transport to you.
So EROEI energy return on energy invested.
Your work is the energy invested and what you get back as agood is the energy return, the difference is in crude terms, profit.
So Id suggest that if you put in 2 units of effort, you would be really annoyed if you only got one back, but would be really happy if you got 100 back.
Money is a proxy and it gets in your way of understanding..
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