Archives for October 2012

NY Subway May Take Weeks to Restore Service, 5 Million Affected; 80 Flooded Homes Destroyed by Fire; Stunning Flood and Fire Images

Courtesy of Mish.

Hurricane Sandy has moved on but the damage remains. The following picture of Times Square posted on Gizmodo caught my eye. Fortunately, it does not look real. Lights should not be on and there would be debris everywhere.

However, the Metra chairman did say water was “literally up to the ceiling” at one downtown station, so take this image and use your imagination, adding dead rats, debris, and whatever else suits your fancy.

Bloomberg reports the New York Subway System May Take Weeks to Recover From Flooding.

Restoring service on New York subway lines that have been flooded could take weeks, said Mortimer Downey, a former MTA executive director and current board member of the Washington Metropolitan Area Transit Authority.

“From the New York viewpoint, they’ve got a lot of work ahead of them,” Downey said in an interview. “It’s going to be days and possibly weeks.”

He declined to estimate what the recovery may cost because there’s no precedent for the work that will need to be done.

Previous reports said the New York city subway would remain closed for 14 hours to four days.

Unprecedented Challenges

Reuters reports Sandy leaves unprecedented challenges for New York City subways

The giant storm Sandy wreaked havoc on the New York City subway system, flooding tunnels, garages and rail yards and threatening to paralyze the nation’s largest mass-transit system for days.

“The New York City subway system is 108 years old, but it has never faced a disaster as devastating as what we experienced last night,” Joseph Lhota, the chairman of the Metropolitan Transit Authority, said in a statement early on Tuesday.

He later said that water was “literally up to the ceiling” at one downtown station.

All seven subway tunnels running under the East River from Manhattan to Queens and Brooklyn took in water, and any resulting saltwater damage to the system’s electrical components will have to be cleaned – in some cases off-site – before the system can be restored, MTA spokeswoman Deirdre Parker said on Tuesday.

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Secessionist Movements: Another Layer of Complexity

Courtesy of John Rubino.

One of the lessons of medieval history (I’m listening to one of those recorded lecture series on the subject this week) is that Europe wasn’t always made up of today’s familiar countries. Italy, Germany, and Spain in particular started out as a patchwork of smaller kingdoms and principalities that were eventually rolled up by the monarchs with the best armies.

This cultural memory of independence lives on in many places, resurfacing in hard times and complicating already complex situations. Spain, for instance, includes several distinct populations, in many cases with their own languages and a sense that, as Texans like to say, they were a country once and might be again. Most Americans have heard of Spain’s Basque separatists because they’ve tended to express their feelings with explosives. But now Catalonia, the country’s richest region, is wondering if perhaps it would be better off on its own:

Europe’s Crisis Spawns Calls for a Breakup—of Spain

BARCELONA, Spain—This vibrant northern region of Catalonia has long been known as the “factory of Spain” for generating wealth that helped sustain the entire nation. Now Catalonia, beaten down by years of recession, has become the battleground in what threatens to become an economic civil war.

In protests large and small, hundreds of thousands of Catalans are embracing a stark proposition: Only by breaking ties with Spain and becoming an independent country can Catalonia free itself from economic malaise.

Catalans go to the polls Nov. 25 for a regional parliamentary election, and polls show pro-independence parties in front.

“Madrid has been draining us dry for too long,” says Josep Casadella, a corporate human-resources administrator. He became an Internet sensation not long ago after posting a video of himself refusing to pay the fare at a toll booth and complaining that Spain should build free roads for all the taxes it collects.

Appalled at the separatist sentiment, a military veterans’ association said that politicians pushing for Catalonian independence should be tried for “high treason.” In recent days, pro-Spanish-unity protesters held a smaller demonstration of their own. Marchers held a sign reading: “Help, Europe. Nacionalists are crazy.”

Spain’s internal struggle echoes a larger debate convulsing the euro zone itself, as wealthier northern nations complain about supporting poorer southern ones. But now, as Europe enters its fifth year of crisis, the economic strains are deepening the fractures within some nations.

In Spain and Belgium, and to a degree Italy, local and national governments are battling over how to allocate scarce resources. Even within Germany, which is economically stronger and politically stable, richer areas are grumbling about the cost of subsidizing the poorer areas.

Catalonia’s president, Artur Mas, called the marriage between his region and the Spanish capital one of “mutual fatigue” in a speech, likening it to the way “northern and southern Europe have grown weary of one another.”

 

Speaking of northern and southern Europe, the “euro-skeptics” continue to gain ground in national elections:

 

Euro Skeptics in Finland Are Projected to Make Gains
HELSINKI—The euro-skeptic Finns Party likely made good on pollster predictions of being the biggest gainer in Finland’s local elections Sunday as the fiercely-nationalistic party continued to gain popularity compared with previous elections.

The party surged past its 2008 municipal election result in gaining 12.3% of votes, according to preliminary data released by the nation’s justice ministry. The justice ministry numbers were based on 99.8% of votes being counted.

While growth in support for the Finns Party, which has advocated Finland’s exit from the euro zone, isn’t expected to drastically impact the day-to-day decisions taken by cities in Finland, the results show that the party’s message remains popular among Finland’s 5.4 million people.

Many political observers have said the strength of the Finns Party is putting pressure on Prime Minister Jyrki Katainen and other policy makers to maintain a tough stance in euro-zone reforms and bailouts of nations suffering from debt woes. The country’s next parliamentary election isn’t until 2015.

Some thoughts
None of this is surprising. The pie is shrinking as Europe deleverages, and groups with relatively more wealth and/or self control are recoiling at the idea of being drained to support others who for whatever reason aren’t as successful. Politicians and parties that give voice to this anger will get votes, and pressure will grow on elected officials to move in that direction.

The question then becomes how far central governments will allow this kind of movement to go. Will Catalonia actually be allowed to leave, or will it be bought off or prevented by force? Will the process encourage the rise of radical parties (like the neo-Nazis in Greece) that may or may not care about autonomy but want other extreme changes in governance? Who knows? Europe is in uncharted waters.

The US, meanwhile, has been spared this kind of unrest because the dollar is still functioning as the world’s reserve currency. The Treasury can borrow as much as it needs to finance Social Security and Medicare payments and keep defense plants running, which takes enough pressure off of state budgets to avoid eurozone-style financial chaos.

But a reserve currency is not a perpetual motion machine. It’s a privilege that can be revoked by the market if abused. So our funding crisis is coming (see China, Russia, and the End of the Petrodollar) and once it begins to dawn on Texas and Montana that their hard-won savings are being siphoned off by profligates like Illinois, the idea of just saying no (nullification) or leaving altogether (secession) will start to poll in double digits. And another layer of complexity will be added to an already chaotic decade.

 

 

Visit John’s Dollar Collapse blog here >

Greece Coalition Splinters, Austerity Vote Delayed, PM Warns of ‘Chaos’; Another Puppet Show or Is This For Real?

Courtesy of Mish.

In Greece, Prime Minister Antonis Samaras coalition has split. The result is yet another delay in an austerity vote required for the next tranche of loans to Greece, and the PM warns of ‘chaos’.

Greece’s conservative Prime Minister Antonis Samaras is at odds with the Democratic Left party, a coalition partner, which is threatening to vote against the new austerity measures unless labor reforms included in them are scrapped.

Samaras formed a coalition with the traditional rival Socialists and the Democratic Left after general elections in June. In a statement, the prime minister said he had “exhausted all the available time” to try and reach a consensus.

“The problem is not whether we (introduce) this measure or that measure. On the contrary: It is what we would do if no agreement is reached and the country is led into chaos.”

Unemployment in Greece has topped 25 percent, with rapidly worsening poverty that has prompted the Democratic Left to harden its position.

“There are certain issues for us that are fundamental — like labor issues,” Theodoros Margaritis, a senior member of the Democratic Left party, told private Skai television. “The dilemma is with Mr. Samaras. Does he want a left-wing party in his government or not? Does he want our consent on certain issues or does he want to proceed alone? If he wants, he may proceed alone.”

Cracks in Greece’s coalition government are likely to be tested late Tuesday when lawmakers are set to vote on a privatization bill. The new law would give the government broader powers to privatize public utilities, but is facing growing dissent from deputies in the Socialist party and Democratic Left.

Another Puppet Show or Is This For Real?  

Is the inevitable about to happen or is this simply another puppet show for the masses?

Having seen so many puppet shows only to see the leftist puppets succumb to warnings of chaos or worse, I simply do not know.

However, when this coalition finally does splinter to smithereens, the radical left will win the next election and promptly tell the Troika to go to hell.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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How “Brazen” does a Banker’s Fraud have to be before he is Prosecuted?

Courtesy of Jaime Falcon.

I’ll get the obvious out of the way first and then turn in future columns to the aspects of the Department of Justice’s (DOJ) civil suit against Bank of America (B of A)/Countrywide that are vital to understand but are more subtle.  The obvious issue arises from the facts that the DOJ alleges that its investigation has found.  The complaint and the DOJ press release state that elite financial criminals committed tens of thousands of “brazen” frauds targeting U.S. government funds.  We are on the hook for all the resultant losses because Fannie and Freddie were systemically dangerous institutions (SDIs) that the Bush administration concluded had to have their creditors bailed out to prevent a far graver global systemic crisis.  

The DOJ alleges that the fraud persisted for years, that senior officers were warned that the lending program they designed would cause endemic fraud, that the senior officers knew that B of A was selling billions of dollars of fraudulent loans to Fannie and Freddie by making false representations, that B of A’s senior leadership consciously covered up the information that the loans were commonly fraudulent, that the senior leadership created perverse bonus systems for their junior (non-professional employees with the expectation, desire, and actual knowledge that doing so led to the origination (and sale to Fannie and Freddie) of endemically fraudulent loans, and that even when Fannie and Freddie confronted B of A with its violations of its representations and warranties B of A refused to honor it contractual obligation to repurchase the fraudulent loans.  DOJ alleges that the frauds persisted for years and continued after B of A purchased Countrywide.  The obvious question (not asked by the AP, WSJ, and NYT articles about the lawsuit in the version on line last Wednesday night) is: why the DOJ has refused to bring a criminal prosecution of the senior officers who led this “brazen” fraud?

The only slightly less obvious question (again, not asked by any of the three articles) is: if the DOJ is going to bring only a civil complaint, why did it fail to include the culpable senior executives in that civil lawsuit?  It does not appear that the reporters asked the DOJ either of these questions.  Our top reporters are so used to DOJ abdicating its responsibility to prosecute elite frauds that they approach the newest example of elite impunity from criminal sanction as not worthy of discussion or even note.  The obvious has become unfathomable to our elite media.

Officials Warn New Yorkers: Stay Inside

Courtesy of Pam Martens.

New York Stock Exchange — Shuttered for the Second Day in a Row

At 6 a.m., New York Governor Andrew Cuomo reported that there are 1,943,572 New Yorkers without power.  Con Ed is reporting that power is out in lower Manhattan below 39th Street with an estimated 250,000 people in Manhattan without power.  The MTA is reporting massive flooding in New York City subways and tunnels. 

New York City is urging all residents to remain indoors, avoid use of elevators and stay away from windows as a precaution against flying debris. The following updates have been posted by New York City: 

  • Alternate Side Parking regulations (street cleaning) will be suspended citywide on Tuesday, 10/30. Payment at parking meters is also suspended throughout the city on Tuesday, 10/30.
  • The MTA has shut down all subway, bus, and commuter railroad service and likely will remain closed throughout Tuesday. 
  • The Staten Island Ferry service is suspended until further notice.
  • East River Ferry service is suspended. 
  • NJ Transit has implemented a gradual system-wide shutdown of all bus, rail, light rail, and Access Link service. 
  • All PATH train service and stations have shut down. 
  • Amtrak has canceled Northeast Corridor service north of NYC, and nearly all service on the eastern seaboard, including Acela Express Northeast Regional, Keystone and Shuttle trains. 
  • The Holland and Hugh Carey (formerly Brooklyn-Battery) Tunnels are closed. 
  • The Tappan Zee Bridge is closed.
  • FDR Drive from Battery to 155th Street is closed.
  • The George Washington, Verrazano-Narrows, Throgs Neck, Whitestone, and Henry Hudson Bridges are closed.
  • The East River Bridges – the Brooklyn, Manhattan, Williamsburg, and Ed Koch-Queensboro bridge – have closed. After 7 pm, only emergency vehicles will be permitted on those bridges.

For ongoing updates, visit these web sites: 

New York City Office of Emergency Management Updates 

Con Edison’s Storm Central Web Site 

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Massive Flooding in New York Subways and Tunnels

Courtesy of Pam Martens.

Port Authority of NY and NJ Released This Photo of Water Rushing Out of an Elevator Shaft Into a Hoboken, NJ Path Station

October 30, 2012

Joseph Lhota, Chairman of the MTA, released the following statement on the current condition of the New York City subway system:

“The New York City subway system is 108 years old, but it has never faced a disaster as devastating as what we experienced last night. Hurricane Sandy wreaked havoc on our entire transportation system, in every borough and county of the region. It has brought down trees, ripped out power and inundated tunnels, rail yards and bus depots. As of last night, seven subway tunnels under the East River flooded. Metro-North Railroad lost power from 59th Street to Croton-Harmon on the Hudson Line and to New Haven on the New Haven Line. The Long Island Rail Road evacuated its West Side Yards and suffered flooding in one East River tunnel. The Hugh L. Carey Tunnel is flooded from end to end and the Queens Midtown Tunnel also took on water and was closed. Six bus garages were disabled by high water. We are assessing the extent of the damage and beginning the process of recovery. Our employees have shown remarkable dedication over the past few days, and I thank them on behalf of every New Yorker. In 108 years, our employees have never faced a challenge like the one that confronts us now. All of us at the MTA are committed to restoring the system as quickly as we can to help bring New York back to normal.” 

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Apocalyptoween

Apocalyptoween

By James Howard Kunstler 

      With little to do while waiting for something possibly very bad to happen people tend to get jokey. That was how I felt about the election until Hurricane Sandy came along. For one thing, I happened to travel (by car – how else?) last week from Bennington through Brattleboro, Vermont, and down into a de-industrialized corner of northwestern Massachusetts. There were at least three major highway bridge re-construction projects (and many lesser ones) still underway along the route from last year's Hurricane Irene, which devastated Vermont. There's a fair chance that Vermont will get whacked again, undoing a billion dollars of work along the same mountain river roads. How demoralizing will that be? And where does the local share of the money come from?

     I remember, too, being in Wilkes-Barre, in Eastern Pennsylvania just a few years ago and seeing that the city never actually recovered from floods induced by Hurricane Agnes in 1972, which coincided with the beginning of the end of the local coal industry. The downtown was functionally dead, with a zombie overlay of social services, wig shops, and street people conversing with themselves. It appears that Hurricane Sandy is going to rip through the same region again, then curl east into my part of upstate New York and finally slog into the same new England states that got bashed last year.

     Then, of course, there is the question of what happens to New York City in the next 48 hours, a potential enormity too vast to quantify from here (not to mention Washington DC, Philadelphia, Baltimore, Wilmington, and the toxic waste dump formerly known as New Jersey).

     My own main worry, sitting here in comfort, in a well-lighted room, is how widespread the electric power outages might be and how long might they last — conceivably even through the election. Surely, Mr. Obama is pacing nervously now in some deep underground White House command center, worrying about what might be required if there is no electricity to run the voting machines across the nation's most populous region, or if many hundreds of thousands of voters get stranded at home by broken bridges and washed-out roads, or how many votes his government might lose if the juice stays on but he can't relieve the anticipated misery fast enough… with the idiot Romney kibitzing from the sideline.

      I don't know if the US can take that kind of disruption and come out the other side the same way it went in. The systems that keep us going are already in trouble, some of them already teetering, like the airline industry, which can barely keep going with jet fuel clocking at 40 percent of its operating costs due to $90-a-barrel oil. The political system itself is more fragile than we might suppose, despite the seemingly despotic reach of surveillance, the size of the government payroll, and the amazing complacency of the sports-and-fructose-saturated public. Few believe in the two major parties, or what they pretend to stand for, including many officers and foot-soldiers in those parties. If the system finds itself unable to hold an election on the day specified by the constitution, what happens then? Another trip to the Supreme Court. Uh-oh….

     Anyway, Hurricane Sandy and all it portends this Monday morning is a nice distraction from all the other things un-winding, tottering, and fracturing in so many advanced nations. Promises of massive (and improbable) bailouts have kept the financial meltdown of Europe a few degrees below critical mass for a couple of months, but the thermometer is inching upward with the ominous Catalan regional election in Spain tipping well toward the secessionists, and Greece whirling around the economic drain, with all of its previous bail-out money merely yo-yoing back to the client banks of the "troika" that arranged the bail-outs, and countries like Italy, Portugal, and Ireland whistling past the graveyard beyond the news media's peripheral vision. And then there is China with its government transition hugger-mugger, its empty make-work cities, its crony banking system unaccountable to anyone, and its extremely modest reserves of its own oil to run the whole hastily constructed shootin' match. They have been working earnestly in plain sight – off the news media's radar screen – to construct a resource extraction empire in Africa, but then they will be stuck with the job of defending 12,000 mile supply lines. Good luck with that.

    Finally, there is the nauseating spectacle of the presidential election itself, with two creatures of corporate capture pretending to represent the interests of some hypothetical majority who wish to remain the slaves of WalMart and Goldman Sachs. If Hurricane Sandy causes such massive disruption as to interfere with the election, perhaps that will be a good thing – a sudden, unavoidable re-thinking of our ossified institutional customs, and a thrust into the emergent history of the future.

670,000 Without Power in NYC; Flood Crests 13.88 Feet, Besting 1960 Record of 10.02 Feet; Wall Street Flooded

Courtesy of Mish.

The good news for New York City is the storm crest has peaked. The bad news is the cleanup will take days, or longer, and much is the city is blacked-out.

Please consider Hurricane Sandy’s Waters Flood Blacked-Out New York City.

Hurricane Sandy sent floodwater gushing into New York’s five boroughs, submerging cars, tunnels and the subway system and plunging skyscrapers and neighborhoods into darkness. Two deaths were reported in Queens and more than 670,000 were without power in the region as of 11:30 p.m. local time yesterday, according to Consolidated Edison Inc.

The company cut electricity to some areas to save its equipment and a transformer exploded at a plant on 14th Street, blacking out others. New York University evacuated its Langone Medical Center when it went dark and backup systems failed.

After the storm’s tide crested about 8 p.m., the East River topped its seawall in the Financial District and flowed up Wall Street in a torrent that turned avenues into canals and intersections into lakes. Flooding took over Brooklyn’s Red Hook neighborhood, submerging cars to the roof, while the Gowanus Canal overflowed and tree limbs plummeted.

A flood gauge at Battery Park, at the southernmost end of Manhattan, registered at 13.88 feet as of 9:24 p.m., beating the modern record of 10.02 feet in September 1960 during Hurricane Donna, the National Weather Service said.

The Metropolitan Transportation Authority was investigating water entering a subway tunnel in Lower Manhattan, said Charles Seaton, spokesman for the largest U.S. transit agency, which stopped its 24-hour system for weather for only the second time in its 108-year history. There’s no way to tell when the system run again, he said.

The Lincoln Tunnel was the only major crossing in and out of Manhattan by about 8:30 p.m. The Brooklyn Battery Tunnel and the Queens Midtown Tunnel both had flooding, according to Ortiz.

Anything electrical that salt water touches is likely ruined. If those subway systems were badly-flooded, there are going to be serious repercussions. We will know more Tuesday morning.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

 

 

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Hurricane Sandy: Litmus Test for America’s Utilities

Hurricane Sandy: Litmus Test for America’s Utilities

By Jen Alic at OilPrice.com

About this time last year, Americans lost faith in their power companies, which failed to respond effectively to restore power outages resulting from a storm. This past summer, a series of outages under less dire weather circumstances demonstrated that the country’s electricity distribution network was bad and getting worse.

Today, as some 60 million people face power outages with the onslaught of Hurricane Sandy, which hit the Eastern Seaboard on Sunday, power companies are expressing confidence that they are up to the latest challenge put forth by Mother Nature. There is little public optimism to support this confidence.

Hurricane Sandy’s 900-mile storm front has already sent tidal surges over the stretch of seaboard from Delaware to New York, and its full impact was not expected until later on Monday, sparking mass evacuations along the coast and a shut-down of metropolitan transit. The National Guard has been deployed and airports ordered to close. Experts expect the storm will reverberate as far as the Great Lakes, of Michigan, Illinois and Wisconsin.

The power outages had already begun on Sunday, with 1,312 homes and businesses without power, mostly in Virginia Beach and the Outer Banks of North Carolina.

So, the National Guard is on top of things, but are the utility companies? They say they have made improvements since last year—though this was not evident during the series of outages this summer.

Despite their confidence, power giants servicing the Eastern Seaboard such as Consolidated Edison Inc., Northeast Utilities, and Public Service Enterprise Group Inc. are already warning customers that they expect power to be out for as long as 10 days from Washington to New England. Is this “advance” warning an improvement?

Communication and coordination have apparently been improved “a lot”.

This summer saw customers and regulators come down on the utilities hard—though perhaps not hard enough—for their slow response to storms in June and August, both of which saw some 4 million people without power for more than a week.

The simple task of tree-trimming had been neglected. It is an expense the power giants weren’t willing to absorb and had gotten away with in a poorly regulated environment. Since then, there has reportedly been an uptick in tree-trimming, while precautions have also been taken to prevent flooding of substations.

This time around, however, the US presidential elections are at stake. It may be impossible to vote.

The only electric light at the end of the tunnel? October 1000, the great electricity transformation.

In the second week of October, the US Federal Energy Regulatory Commission began enforcement of Order 1000, the backbone of a major transformation of the US electricity market. With electricity demand expected to grow by about 1.1% year on year through 2030 and the current state of affairs unable or unwilling to deal with the fall-out from storms, like Hurricane Sandy, a transformation is necessary, and even urgent (ask anyone living on the Eastern Seaboard today).

The situation is this: around 70% of US power lines and transformers are too old (about 25 years), while 60% of circuit breakers are about three decades old. Managing or averting severe blackouts will take over $6.5 billion in investment—and the privately-owned power utilities certainly don’t want to foot to bill (not even for tree-trimming).  But the losses in the event of a major power outage are greater and run in the billions.

 

Related Article: Flaring Increases in the US Due to Low Natural Gas Prices

Related Article: Why Shale Oil Will Never be a Game Changer

Picture from GeekOSystem

Hurricane Sandy: how utilities are planning for power outages

Hurricane Sandy: how utilities are planning for power outages (via The Christian Science Monitor)

With utility companies analyzing potential storm tracks for hurricane Sandy and deciding just how many utility crews to request to prepare for fallen power lines, Seth Guikema could be their best friend. He is part of a pioneering attempt to help power companies allocate their men and equipment accurately…

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The Scam Wall Street Learned From the Mafia

The Scam Wall Street Learned From the Mafia 

By MATT TAIBBI, Rolling Stone

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

Keep reading: The Scam Wall Street Learned From the Mafia | Politics News | Rolling Stone.

Nation’s Oldest Nuclear Power Plant, New Jersey’s Oyster Creek, Declares Alert Following Water Surge

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

As a reminder, the biggest catastrophe that resulted from last year's Tohoku earthquake in Japan was not the earthquake itself, nor the infrastructure destruction from the susbequent tsunami, but the impact of the soaring water wall on the nuclear power plants in the coastline, namely Fukushima, and its aftermath, by now known all too well to all. So tonight too, all along the east coast, the biggest threat is not the wind, nor the rain, but the impact of the storm surge on the tens of nuclear power plants located in the vicinity of the rapidly rising tide. Such as Oyster Creek in New Jersey which just went on alert due to the surging water level.

From AP:

The nation's oldest nuclear power plant is on alert after waters from a colossal storm reached high levels.

Oyster Creek in Lacey Township, N.J., was already offline for regular maintenance before Sandy, a superstorm downgraded Monday night from a hurricane, slammed the East Coast.

The Nuclear Regulatory Commission says an "unusual event" was declared around 7 p.m. when water reached a high level. The situation was upgraded less than two hours later to an "alert," the second-lowest in a four-tiered warning system.

Federal officials say all nuclear plants are still in safe condition. They say water levels near Oyster Creek, which is along the Atlantic Ocean, will likely recede within a few hours.

Oyster Creek went online in 1969 and provides 9 percent of New Jersey's electricity.

And elsewhere, we just saw the following also very disturbing headline from US Emergency Services:

PA | HYNDMAN |**EVACUATION**| – | VOLUNTARY EVAC DUE TO NUCLEAR WARNING IN BEDFORD COUNTY. UEA325 | UEA451 |

We will keep track of any related news and report as soon as we see it.

85% of Atlantic City Flooded; New York Subway in Jeopardy; Markets Closed Again Tuesday; Hurricane Sandy Image from Space

Courtesy of Mish.

As many as 2 million customers are without power as Sandy slammed into New Jersey and New York.

The markets will be closed again on Tuesday but may  resume on Wednesday, the final trading day of the month. New York’s mass transit system remains shut and it is unclear when service will be restored.

Here is an Image of Hurricane Sandy from Space from a New York Post Tweet.

Large Nor’Easter on Steroids

Accuweather (Premium) says Northeast Catastrophe Unfolding.

An extremely rare and dangerous storm, “Sandy,” has roared in from the Atlantic Monday evening. Inundations have already occurred and will get worse through the first part of Monday night.

According to Expert Senior Meteorologist Steve Wistar, “Sandy is unfolding as the Northeast’s Katrina in terms of impact.”

There is the potential from the central New Jersey coast to New York City and western Long Island have some of their worst coastal flooding on record with Sandy tracking into New Jersey.

High Winds, Power Outages and Downed Trees

Sandy will not be your typical hurricane as it moves in from the southeast. Hurricanes are small and compact. Damaging wind gusts will reach from Boston to Washington, D.C., and inland to the central Appalachians.

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Tracking hurricane Sandy: As storm ‘zigs’, it’s also changing dramatically

Tracking hurricane Sandy: As storm 'zigs', it's also changing dramatically (via The Christian Science Monitor)

With hurricane Sandy on final approach to formally making landfall near the southern tip of New Jersey late Monday evening, the storm is on the verge of an unusual shift. Even as it makes a left turn to head toward the coast, it also is swapping energy sources to become an extratropical cyclone. Such…

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Hurricane Sandy: Litmus Test for America’s Utilities

Hurricane Sandy: Litmus Test for America's Utilities

By Jen Alic at OilPrice.com

About this time last year, Americans lost faith in their power companies, which failed to respond effectively to restore power outages resulting from a storm. This past summer, a series of outages under less dire weather circumstances demonstrated that the country’s electricity distribution network was bad and getting worse.

Today, as some 60 million people face power outages with the onslaught of Hurricane Sandy, which hit the Eastern Seaboard on Sunday, power companies are expressing confidence that they are up to the latest challenge put forth by Mother Nature. There is little public optimism to support this confidence.

Hurricane Sandy’s 900-mile storm front has already sent tidal surges over the stretch of seaboard from Delaware to New York, and its full impact was not expected until later on Monday, sparking mass evacuations along the coast and a shut-down of metropolitan transit. The National Guard has been deployed and airports ordered to close. Experts expect the storm will reverberate as far as the Great Lakes, of Michigan, Illinois and Wisconsin.

The power outages had already begun on Sunday, with 1,312 homes and businesses without power, mostly in Virginia Beach and the Outer Banks of North Carolina. 

So, the National Guard is on top of things, but are the utility companies? They say they have made improvements since last year—though this was not evident during the series of outages this summer.

Despite their confidence, power giants servicing the Eastern Seaboard such as Consolidated Edison Inc., Northeast Utilities, and Public Service Enterprise Group Inc. are already warning customers that they expect power to be out for as long as 10 days from Washington to New England. Is this “advance” warning an improvement?

Communication and coordination have apparently been improved “a lot”.

This summer saw customers and regulators come down on the utilities hard—though perhaps not hard enough—for their slow response to storms in June and August, both of which saw some 4 million people without power for more than a week.

The simple task of tree-trimming had been neglected. It is an expense the power giants weren’t willing to absorb and had gotten away with in a poorly regulated environment. Since then, there has reportedly been an uptick in tree-trimming, while precautions have also been taken to prevent flooding of substations.

This time around, however, the US presidential elections are at stake. It may be impossible to vote.

The only electric light at the end of the tunnel? October 1000, the great electricity transformation.

In the second week of October, the US Federal Energy Regulatory Commission began enforcement of Order 1000, the backbone of a major transformation of the US electricity market. With electricity demand expected to grow by about 1.1% year on year through 2030 and the current state of affairs unable or unwilling to deal with the fall-out from storms, like Hurricane Sandy, a transformation is necessary, and even urgent (ask anyone living on the Eastern Seaboard today).

The situation is this: around 70% of US power lines and transformers are too old (about 25 years), while 60% of circuit breakers are about three decades old. Managing or averting severe blackouts will take over $6.5 billion in investment—and the privately-owned power utilities certainly don’t want to foot to bill (not even for tree-trimming).  But the losses in the event of a major power outage are greater and run in the billions. 

 

Related Article: Flaring Increases in the US Due to Low Natural Gas Prices

Related Article: Why Shale Oil Will Never be a Game Changer

Picture from GeekOSystem

Markets look to Bank of Japan for policy action

Markets look to Bank of Japan for policy action (via AFP)

Under siege from politicians clamouring for urgent action on Japan's slowing economy, the nation's central bank was expected Tuesday to usher in fresh easing measures after its policy meeting. The Bank of Japan, hounded by calls to take stronger action to shore up the world's third-largest economy,…

[Read more…]

Hurricane Sandy: Live Report

Hurricane Sandy: Live Report (via AFP)

2239GMT: My colleague Sebastian Smith in Atlantic City is on the beach right now. "There are many rows of waves coming all the time. The sea level is already well above where it should be," he says. Wooden cabins that are part of a hotel complex are already flooded and streets are nearly empty, he…

[Read more…]

The $100 Billion Storm: 17 Things You Should Know About Hurricane Sandy

The $100 Billion Storm: 17 Things You Should Know About Hurricane Sandy

Courtesy of Michael Snyder of Economic Collapse

 

Meteorologists are warning that Hurricane Sandy could potentially be the worst storm to hit the east coast of the United States in 100 years.  Do you remember "the perfect storm" back in 1991? That storm was so bad that Hollywood made a blockbuster movie starring George Clooney about it.  Well, this storm is going to be much worse. 

When I first heard about Hurricane Sandy, I didn't make that much of it. I figured that the east coast would get some wind and some rain and that they would whine about it a bit but that everything would be just fine.  But then I started looking into this storm a bit more.  It turns out that this storm is even larger than Hurricane Katrina was. The National Oceanic and Atmospheric Administration has categorized the destructive potential of this storm to be 5.8 on a scale that goes from 0 to 6.  So don't be fooled when you hear that this is only a "category 1 storm" or that the maximum winds will only be around 80 MPH. It is the unprecedented size of this storm, and the mind boggling storm surges, that it is producing that truly make it dangerous. It is being reported that Hurricane Sandy is more than 1,000 miles across from one end to the other.  Meteorologists have never seen anything quite like this before, and we are most definitely in unprecedented territory. One meteorologist is already projecting that this megastorm could cause 100 billion dollars in damage, but the true amount of devastation will likely not be fully known for weeks.  If you live in the northeast part of the United States, you definitely want to buckle up because you are about to get hammered.

The following are 17 things that you should know about Hurricane Sandy…

#1 Hurricane Sandy has been dubbed "the Frankenstorm" and many believe that this could be the worst storm to hit the east coast in 100 years.

#2 This is an absolutely massive megastorm.  It is being reported that tropical storm-force winds can be felt 520 miles away from the center of the storm.

#3 It is being reported that the sheer size of this storm is absolutely unprecedented

Since records of storm size began in 1988, no tropical storm or hurricane has been larger, reports meteorologist Jeff Masters of the Weather Underground.

#4 Hurricane Sandy has already forced the cancellation of over 5,000 flights.

#5 Mayor Bloomberg has announced a mandatory evacuation for all New York City residents that are living in "Zone A".

#6 It is being projected that the storm surge from Hurricane Sandy could be up to 15 feet above sea level in some areas of New York City.

#7 New York City could potentially experience wind speeds of 80 MPH or higher.

#8 Subway service in New York City is being shut down at 7 PM on Sunday evening.  There is a very real possibility that the New York City subway system could be severely flooded by this storm.  That could be quite crippling, because about 4.3 million people ride the subway in New York every single day.

#9 It has been announced that all public schools in New York City will be closed on Monday.

#10 Schools in Boston will be shut down on Monday as well.

#11 The trading floor of the New York Stock Exchange will be closed on Monday.

#12 50,000 people living along the coast in Delaware have been ordered to evacuate.

#13 Some parts of Kentucky, West Virginia and North Carolina could get up to 2 feet of snow.

#14 It is being estimated that 10 million people living along the east coast could lose power thanks to Hurricane Sandy.

#15 A state of emergency has already been declared in New York, New Jersey, Connecticut, Pennsylvania, Maryland and Virginia.

#16 Approximately 50 million people live in the areas that will be directly affected by this storm.

#17 Meteorologist Mike Smith of AccuWeather Enterprise Solutions is projecting that Hurricane Sandy could potentially cause a total of 100 billion dollars in damage to the U.S. economy.  That would make it a far more costly disaster than Hurricane Katrina.

Many meteorologists are calling this storm a "worst case scenario".  If you live along the east coast, please take the warnings that you are getting from public officials very seriously.  According to NPR, conditions are absolutely perfect for this slow moving giant storm, and it is going to take quite a few days for it to exit the region…

In this case, seas will be amped up by giant waves and full-moon-powered high tides. That will combine with drenching rains, triggering inland flooding as the hurricane merges with a winter storm system that will worsen it and hold it in place for days.

Louis Uccellini, environmental prediction chief for the National Oceanic and Atmospheric Administration, told The Associated Press that given Sandy's due east-to-west track into New Jersey, that puts the worst of the storm surge just north in New York City, Long Island and northern New Jersey. "Yes, this is the worst case scenario," he said.

Please do not underestimate this storm.  This is unlike anything that any of us have ever seen before.

If you live in a part of the country that is being affected by this storm, please feel free to leave a comment and let us know what you are seeing in your area.  It is going to be a crazy couple of days.

 

Mega Storm Sandy Tweets and Links and Live Weather Channel Feed

Courtesy of Lee Adler of the Wall Street Examiner

I will be tweeting and retweeting interesting posts about the storm from a variety of sources over the next few days, in particular from the Philly media covering the region where the center of the storm will make landfall and move inland. Check out my feed in the right sidebar or at  my Twitter page.

Here are some useful links.

Storm model plots.

 

Storm Surge Probability Interactive

 

Tropical Storm Wind Probabilities

 

Atlantic City Electric Power Outage Map

NHC Forecast and Discussion Page


Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.

Why Energy May Be Abundant But Not Cheap

Courtesy of Charles Hugh-Smith Of Two Minds

It doesn’t matter how abundant liquid fossil fuels might be; it’s their cost that impacts the economy.

Many people think “peak oil” is about the world is “running out of oil."

Actually, “peak oil” is about the world running out of cheap, easy-to-get oil. That means fossil fuels might be abundant (supply exceeds demand) for a time but still remain expensive.

The abundance or scarcity of energy is only one factor in its price. As the cost of extraction, transport, refining, and taxes rise, so does the “cost basis” or the total cost of production from the field to the pump. Anyone selling oil below its cost basis will lose money and go out of business.

We are trained to expect that anything that is abundant will be cheap, but energy is a special case: it can be abundant but costly, because it’s become costly to produce.

EROEI (energy returned on energy invested) helps illuminate this point. In the good old days, one barrel of oil invested might yield 100 barrels of oil extracted and refined for delivery. Now it takes one barrel of oil to extract and refine 5 barrels of oil, or perhaps as little as 3 barrels of unconventional or deep sea oil.

In the old days, oil would shoot out of the ground once a hole was drilled down to the deposit. All the easy-to-find, easy-to-get oil has been consumed; now even Saudi Arabia must pump millions of gallons of water into its wells to push the oil up out of the ground. Recent discoveries of oil are in costly locales deep offshore or in extreme conditions. It takes billions of dollars to erect the platforms and wells to reach the oil, so the cost basis of this new oil is high.

It doesn’t matter how abundant liquid fossil fuels might be; it’s their cost that impacts the economy. High energy costs mean households must spend more of their income on energy, leaving less for savings and consumption. High energy costs act as a hidden “tax” on the economy, raising the price of everything that uses energy.

As household incomes drop and vehicles become more efficient, demand for gasoline declines. Normally, we would expect lower demand to lead to lower prices. But since the production costs of oil have risen, there is a “floor” for the price of gasoline. As EROEI drops, the price floor rises, regardless of demand.

This decrease in real incomes and ratcheting-higher energy costs could lead to a situation where energy is abundant but few can afford to buy much of it.

The relative abundance of fracked natural gas and low-energy density fossil fuels like tar sands and shale has led to a media frenzy that confuses abundance with low cost. This article (via correspondent Steve K.) illustrates the tone and breezy selection of data to back up the "no worries, Mate" forecast of abundant cheap liquid fuels: An economy awash in oil. (MacLeans)

Not so fast, reports Rex Weyler of the Deep Green Blog. Here is Rex's response to the above article.

Fair point about the volume of unconventional – deepwater, shale gas & oil, tar sands, etc. – hydrocarbons. These reserves may even produce peakies and/or sustain the plateau longer than some observers believe. However, biophysical restraints remain real; peak oil remains real; peak net energy appears imminent, and the impact on economies is already being felt globally. Points to consider:

The dregs: In spite of huge shale & tar reserve discoveries, peak discoveries remain well behind us, in the 1960s. My father, a petroleum geologist his entire life (and still, in Houston, Kazakstan…), knew about shale and tar deposits when I was a teenager in the 1960s. He called them "the dregs." These deposits are not really news within the oil industry. And they are the dregs because of high cost, low EROI and rapid depletion.

EROI: The volume of these low-net-energy reserves could extend peak oil production for decades, but at fast-declining net energy returned to society. We high-graded Earth’s hydrocarbons, just as we high-graded the forests, fish, copper, tin, water, and so forth. We’ve taken the best, highest EROI hydrocarbons, the 100:1 free-flowing wells of the 1930s and 40s. We’re now into the 3:1 and 2:1 tar sands.

For example: damming rivers in Northern BC, to send electricity to the fracking fields, to send shale gas to Alberta, to cook the boreal substrate, and mix the black sludge with gas condensate shipped in from California and by pipeline from Kitimat to Fort McMurray, to mix with the bitumen, to pipe to Vancouver Harbour, to ship to China, to burn in a power plant, to supply electricity to their manufacturing empire.

By the time any of this energy gets used to actually make something useful to someone in society, and by the time that user puts that usefulness to work to feed, clothe, house, or heal anyone, there is no net-energy left.

Our food in North America is already negative net energy by1:10 at best, up to 1:17 or worse for much of the crap we eat. This matters. EROI at well-head, EROI at the consumer pump, and EROI at the point of society’s actual service all matter.

Well-head EROI, counting all public subsidies, is now in the 5:1 to 1:1 range for all these “non-conventional” (meaning the dregs) hydrocarbon deposits. Money can be made. Some energy can be delivered to Society, but this is already way below the well-head EROI that could likely run the current complexity of the human society, much less “grow” economies.

The degrading reserves take us down along the EROI curve, in which Net Energy returned to society falls off a cliff around 6:1, and is in freefall by 3:1. Net-energy alone kills the idea of much economic growth from a booming hydrocarbon bonanza (other than some great stock plays along the way). Furthermore, depletion renders the idea ever more unlikely:

Depletion: Depletion rates on these gas fields have arrived quickly and appear drastic by historic industry standards. The fracking fields peak early and decline swiftly. In the Bakken shale field – one of the great North American saviour fields – the average well has produced ~ 85k barrels in its first year and then declined at about 40% per year. The newer average wells peak earlier and decline faster, so the overall trend is down.

The depletion moves the production process along a function that approaches zero net energy… Down we go along the EROI curve… 5:1 .. 4:1 .. 3 .. 2 … and then really complex society breaks down. An Amish farmer gets 10:1.

The Bakken break-even oil price is $85, so there is no profit in any of this right now, but of course there will be if global depletion exceeds demand from crashing economies.

Depletion – both in volume and quality – and depletion for all industrial materials and energy stores, EROI, and economic stagnation all work as feedback loops. No one knows the bifurcation points in this complex system. We try to predict those, but miss by a longshot sometimes. Complex societies crash in this manner, declining returns on investments in complexity, from Babylon to London and Washington. See J. Tainter, H. Odum, N. Georgescu-Roegen, Hall, Cleveland, et al.

Here are some depletion data on The Oil Drum: Is Shale Oil Production from Bakken Headed for a Run with “The Red Queen”?.

See A Review of the Past and Current State of EROI Data (PDF) by Hall, Cleveland, et al. (source: www.mdpi.com)

There is a lot of EROI data here: Obstacles Facing US Wind Energy. (The Oil Drum)

Below is the EROI curve, only the “We are here” point at 10:1 is the modern average, and from a few years ago. The new conventional stuff is coming in lower and and the enhanced recovery, shale and tar fields are already over the falls at 6 or 5:1 for the better stuff (best dregs), and 3:1 to 1:1 for the dregs of the dregs, the deeper shale and tar sands.

 

 

So yes, our friends are correct about the great volume of tar, shale, deep, heavy hydrocarbons, but increasing production of world liquid hydrocarbons much beyond the current 85mb/d is not likely, and increasing net production is even less likely. As you may know, net production per capita peaked in 1979. Actual net production is peaking now. This is the figure that counts: Actual current Net Production Delivered to Society.

Growing this figure is technically possible, and may happen with some massive production bonanzas, i.e. we may see actual production push above 90mb/day, or higher, and may even see net production increase, but a major glut of hydrocarbons? No. Not remotely.

When settlers first came to North America, they found copper nuggets the size of horses exposed in river beds. China just bought the best known, last, huge, moderate-to-low-grade, strip-minable, high-cost copper field in the world, in Afghanistan, for $billions over the western bids. There will be others, but rest assured: They will be lower grade, higher cost, and the competition will be more intense. When was the last time you bought a “copper” fitting at the hardware store. They’re crap. The alloys are crap. Because the ore quality is in decline and the costs of extraction are rising. Same with oil, trees, tin, coal….

Make no mistake: The war for the dwindling materials and energy flow is well underway.

Thank you, Rex, for this commentary on EROI and the quality and cost of hydrocarbon resources. Complex systems like economies are nonlinear, and so history does not necessarily track linear extrapolations of present trends. With that caveat in mind, the preponderance of evidence supports the notion that fossil fuel energy may remain abundant in the sense that supply meets or exceeds demand in a global recession, but the price of liquid fuels may remain high enough to create a drag on growth, employment, tax revenues and all the other economic metrics impacted by high energy costs.

Hurricane Sandy Update: First $100+ Billion Storm in U.S. History?

Courtesy of Mish.

Sandy is classified as a Hurricane 1 status, a low-grade hurricane. However, don’t let that fool you in terms of impact. It’s not the absolute magnitude of the hurricane, but rather the magnitude vs. what the infrastructure can handle that matters.

Barometric pressure is 27.76, the lowest pressure recorded for a storm in the Northeast. Sandy is unprecedented in size as well. The hurricane is likely to reach shore with a full moon high tide raising storm surges several more feet.

Accuweather notes “The storm surge will reach generally 5-10 feet with up to 15 feet possible in a locations along and to the north of where the center makes landfall. When a 2-foot tide this evening is combined with 10- to 20-foot wave action, water will reach more than 30 feet above sea level in places. … Total damage from Hurricane Sandy may well exceed Katrina’s $96 billion. This could be the first $100+ billion storm in U.S. history.

New Jersey, New York, Washington DC, West Virginia, Pennsylvania, Maryland, Vermont, and Connecticut have all declared states of emergency. Parts of New Jersey are under mandatory evacuation. At least 60 million people will be affected.

As Sandy Barrels Toward New Jersey Coast, the hurricane remains on track to become a historic storm for the mid-Atlantic and southern New England.

New Jersey and New York City face for very dangerous conditions and catastrophic damage. As of 2:40 p.m. EDT Monday CNN, nearly 300,000 customers are without power in seven states. New Jersey has the most at 92,000. Over 7,000 flights have been cancelled.

Damaging and life-threatening impact from the giant, powerful storm will reach as far inland as the central Appalachians and will span the coast from North Carolina to southern New England.

The record tide gauge in Atlantic City New Jersey is 9.0 feet. Sandy is at 8.25 feet now, and a near-lock to surpass the previous high, perhaps by many feet. Moderate to major flooding is already occurring in the Chesapeake Bay.

The Chesapeake Bay near Kiptopeke, Va., is at major flood stage of 5.95 feet, less than one foot below the record high of 7.1 feet set on March 7, 1962.

The Chesapeake Bay Bridge Tunnel, Va., is at 6.71 feet. This is also only 1 foot below the record flood stage of 7.5 feet set on Sept. 18, 2003.

In the Appalachian mountains, blizzard whiteout conditions with as much as two feet of snow are expected.

Continue Here

Battle (against Cancer) is On, and WE are Losing

Cancer fight stalls amid push for profits, doctors say 

Excerpt from the Guardian:

Only a few years ago, many cancer experts thought the arrival of targeted medicines, designed to attack the genetic makeup of the tumour, would make dramatic inroads into cancer deaths. That has not happened. Instead, these therapies have only bought a few extra months of life. If the question was whether the world was winning the war on cancer, said Douglas Hanahan of the Swiss Institute for Experimental Cancer Research, who outlined the latest state of drug research, "in general, for most forms of human cancer, the answer is clearly no".

The excitement generated by targeted drugs, which interfere with specific molecules involved in tumour growth and suppression, has been short-lived.

Doctors reported apparently miraculous results from the use of the BRAF-inhibitor vemurafenib in advanced malignant melanoma, a usually fatal form of skin cancer. Within two weeks, the tumours had melted away.

"But six months later, [the cancer] is back with a vengeance," he said.

Other drugs working in a similar way – including erlotinib (Tarceva) for a form of lung cancer, bevacizumab (Avastin) for breast, colorectal and other cancers, and sunitinib (Sutent) for renal cell carcinoma and gastrointestinal sarcoma – have also not done so well, said Hanahan. Resistance to the drugs builds up, sometimes very quickly. "All came on line with great expectations. The reality check is they are all working in the important first step, but we have a long way to go in terms of winning the war."

Full article: Cancer fight stalls amid push for profits, doctors say | Society | The Guardian.

How does this sad situation play out in the lab? From the perspective of the cancer cells, life is great. For researchers, it's been a frustrating, uphill battle. 

The Onion reports:

Latest Study Finds Cancer Cells Now Cruelly Mocking Researchers

ROCHESTER, MN—Stating that cancer cells are now “laughing in our f*cking faces,” a new Mayo Clinic study with widespread implications for the treatment and potential cure of the disease has found that the malignant growths have begun cruelly mocking researchers. ?

The findings—published this week in a rambling, expletive-laden 8,000-word article in The Journal Of The American Medical Association—provides the strongest evidence yet that abnormal cells targeted with cutting-edge cancer treatments are basically flipping off scientists left and right, and get a huge kick out of making oncologists feel like a bunch of bumbling dipshit chumps.

“By mounting comprehensive and systematic attacks on malignancies with emerging technologies such as low-cost genetic sequencing, artificial intelligence, and monoclonal antibody treatments, what we’ve discovered is that cancer cells are little pricks that think they’re the king of the f*cking world,” lead author Dr. Charles Sepkowitz said of the study, which found that most leading cancers are pretty goddamn proud of themselves, especially when exasperated oncologists feel like their research is going nowhere…

Keep reading: Latest Study Finds Cancer Cells Now Cruelly Mocking Researchers

Credibility Trap: Moyers And Barofsky on Failed Reform and Another Financial Crisis

Credibility Trap: Moyers And Barofsky on Failed Reform and Another Financial Crisis

Courtesy of Jesse's Cafe Americain 

The Bullet and the Bribe

This is the second part of the Moyers interview with Neil Barofsky.

BILL MOYERS: I thought, at the time, this was an incestuous orgy going on there, between inside players at Washington and inside players at Wall Street. Is that too strong?

NEIL BAROFSKY: It's probably not too strong. It's the fact that their ideology matches up. And look, one of the reasons why their ideology matches up is they all come from the same small handful of institutions. And the people I was dealing with on a daily basis came from the same financial institutions that helped cause the financial crisis and were the most generous recipients of bailouts, Goldman Sachs, Bear Sterns, which, of course, had been adopted by J.P. Morgan Chase. Goldman Sachs, Goldman Sachs, it seemed like every time I turned around, I bumped into someone from Goldman Sachs.

Which is not to single them out. But they all bring that ideology with them, when they come to Washington. It's not like somebody hits them in the head with a magic wand and they give back everything that they've learned and believed in their years of Wall Street. And they bring that ideology with them. And even those who don't come from a specific bank, when you surround yourself, create an echo chamber of likeminded people, it's not terribly surprising that the government policy looks a lot like what the Wall Street institutions themselves would have most desired.

And I think the other side effect of that is that people who are outside of that bubble, people who don't have that background, people like myself as a federal prosecutor or Elizabeth Warren, who was the chair of the Congressional Oversight Panel and before that a Harvard professor, that our views, our criticisms, our contrary positions were discounted, mocked, ridiculed, insulted, cursed at, at times. Because there was no– we didn't have the pedigree in their world to have a meaningful contribution. So what happens is that there's no new ideas that creep in. And you get this very uniform, very non-diverse approach to the problems of finance.

BILL MOYERS: It was puzzling to outsiders like me that you had TARP money being used to concentrate further the size of these banks.

NEIL BAROFSKY: And the granddaddy of all those transactions, Bank of America acquiring Merrill Lynch. And the important thing to remember here is this is not banks gone wild, banks taking the money and saying, "Party time, we're going to consolidate." They did this with the encouragement of the government. And in Bank of America, a little bit with a gun to the head to complete that transaction.

This was the government policy created by the architects, Ben Bernanke who is chair of Federal Reserve, Tim Geithner, who was then the president of the New York Fed before becoming Treasury Secretary, and Hank Paulson. Their solution originally was to further concentrate the industry, to make the too big to fail banks bigger.

The theory was you take a healthier bank and mix it up with a failing bank and you get something somewhere in between, which is better overall for the system. Which may have had some validity in the very, very short term, but has put us on a path, I believe, to being even more dangerous. Because you have institutions now that are just monstrous in size, over $2 trillion in assets by certain measures, close to $4 trillion by other measures. Terrifying. The idea that any of these institutions could ever be allowed to fail is pure fantasy, at this point.

BILL MOYERS: Are you suggesting that we could have another crash?

NEIL BAROFSKY: I think it's inevitable. I mean, I don't think how you can look at all the incentives that were in place going up to 2008 and see that in many ways they've only gotten worse and come to any other conclusion.

BILL MOYERS: What do you mean incentives in place?

NEIL BAROFSKY: So in a normal functioning capitalist utopia, where, you know, most markets are that don't have this too big to fail, this presumption of government bailout if a firm like a Citigroup amasses massive amounts of risk. And in so doing, they keep razor-thin capital to absorb potential losses, which basically means they're just borrowing tons and tons of money.

And not have a lot of their own money at stake, but it's mostly borrowed money. And it is very opaque. It's not very transparent about how they're running their business. You would expect that creditors, people lending them money, counterparties, those on the other sides of their transactions would either stay away or really exact a premium. But the presumption of bailout changes that on its head and actually makes it go in the other direction. So it removes the incentive of the other market participants to impose what's known as market discipline. Because that's ideally in a capitalist society what happens is that the lenders and creditors and counterparties say, "Hey, we're not going to do business with you unless you clean house, slim down, be more transparent."

But when there's a presumption of bailout, that disappears. Because all those other market players can feel safe in the presumption that if anything goes bad at Citigroup, Uncle Sam is going to come in and make their bets whole.

Then you have the very real incentive for the executives at that institution to then pile on risk. Because they know that if the bets go well in the short term, they get paid. And they get paid very richly. But if it blows up and the risks go bad, no worry, the taxpayer's going to be on the other side of that bill.

That's what happened to Fannie Mae and Freddie Mac, before they collapsed. That's what happened to our biggest banks and global banks before they collapsed. And if you maintain that system, it is foolhardy to think that those incentives and pressures are not once again going to carry the day.

BILL MOYERS: At a conference a week or so ago, here in New York, you said playing ball for Wall Street has become a normal way of life, despite the panic of 2008. What does it mean, "playing ball for Wall Street"?

NEIL BAROFSKY: Well, what I saw when I was in Washington was this real pressure on myself, on other regulators to essentially keep their tone down. And I was told point blank by Assistant Secretary of the Treasury that, this is about in 2010.

And he said to me, he said, "Neil, you're a smart guy. You're a young guy. You're a talented guy. You got your whole future in front of you. You've got a young family that's starting out. But you're doing yourself real harm.” And the reason why you're doing yourself real harm is the harsh tone that I had towards the government as well as to Wall Street, based on what I was seeing down in Washington. And he told me that if I wanted to get a job out on the Street afterwards, it was going to really be hard for me.

BILL MOYERS: You mean on Wall Street?

NEIL BAROFSKY: Yes. And I explained to him that I wasn't really interested in that. And he said, "Well, maybe a judgeship. Maybe an appointment from the Obama administration for a federal judgeship." And I said, "Well, again, that would be great. But I don't really think that's going to happen with my criticisms." And he said it didn't have to be that way. "If all you do is soften your tone, be a little bit more upbeat, all this stuff can happen for you."

And that's what I meant by playing ball. I was essentially told, play ball, soften your tone, and all of these good things can happen to you. But if you stay harsh that was going to cause me real harm in those words.

BILL MOYERS: What made you able to say no to the temptation?

NEIL BAROFSKY: Well, I think part of it is the only job I ever wanted was to be a federal prosecutor.

BILL MOYERS: Send bad guys to jail?

NEIL BAROFSKY: It doesn't get much better than that. Really interesting, complicated work, and wear the white hat. So I didn't have those incentives that I think that were presented. And I think, look, you know, being trained in the U.S. Attorney’s Office for the Southern District of New York, I was trained to be a government employee and to take my oath of office very seriously.

But I wasn't really interested in their reindeer games. And I felt a real obligation and sense of duty to fulfill the oath that I took in Secretary Paulson's office on December 15th, 2008 to do the job that I was sent down there to do. But I wasn't really tempted with a big job on Wall Street. And frankly, if it meant getting a judgeship, compromising the job that I needed to do and was supposed to do, it just wasn't interesting to me.

But look, let me be very clear. I also have the fallback of I was a trial lawyer. I prosecuted a lot of big cases. And I knew that whatever happened, I could always go back and get a good job in New York, working at a law firm or doing legal work. So it gave me a degree of financial freedom even though I basically spent most of my career as a government employee and I didn’t have money. I didn't necessarily need to please anyone to be able to go back and still be able to feed my family.

BILL MOYERS: What happens to a political society, to a democracy, when we stifle or bribe or shoot the sheriff?

NEIL BAROFSKY: When I had my incident with the assistant secretary that my deputy, who had come down from– who's another former federal prosecutor, who did narcotics work, said to me, Kevin Puvalowski. And he said to me, "Neil, you were just offered the bullet or the bribe, the gold or the lead."

And what he was referring to was a society just like that, which was Colombia, back in the day when Pablo Escobar and the drug kingpins really controlled society. And what he was referring to is that basically to corrupt society Escobar would go to a magistrate or a police officer, police chief, a politician, and say, "You have two choices. You can either take this giant pile of money and do my bidding. Or you can get the lead, a bullet in your head."

And Kevin was joking that I just received the Washington white collar equivalent of the gold or the lead. And it was funny, at the time,but that's kind of what happens in a society where the rewards and incentives are, again, nobody's getting shot in the head thank goodness. But it's a breakdown of the system.

And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not. And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of — and I don't want to get clichéd, but the one percent or the .1 percent — to the detriment of everyone else.

BILL MOYERS: You make it clear in the book that the Obama administration fought against cutting down the size of these banks. And yet, in the second debate with Mitt Romney the president said, "We passed the toughest Wall Street reform since the Great Depression." As I hear you, it wasn't all that tough.

NEIL BAROFSKY: Well, that's a literally true statement. Because when you think of– but it's a very low bar to clear. I mean, all of the regulatory reform since the Great Depression has been peeling back on those regulations. With really the big death knell happening in the end of the Clinton administration with, you know, a couple of bills, one that removed the last vestiges of the separation between commercial and investment banks.

BILL MOYERS: Glass-Steagall Act?

NEIL BAROFSKY: Glass-Steagall.

BILL MOYERS: It took down the wall between those two?

NEIL BAROFSKY: The last part of it. And then the second part by passing a bill that made it, essentially made derivatives out of bounds for regulation. So saying that it's the toughest is literally true. The problem is it hasn't been tough enough in where it most matters.

And again, you don't really have to take my word for it. You just look what the market has done. Based on the presumption of bailout, the banks get higher ratings from the credit rating agencies which means they can borrow money for less, because their debt is viewed by the credit rating agencies as being less risky. And they get these higher ratings on explicit presumption that the government will bail them out and make good on their debt.

So it didn't deliver the goods where it matters the most. Again, not saying that it doesn't have some good positive things for our system and for people. But it didn't deliver the most important thing that we need if we want to address the causes of the last crisis and help prevent the next one.

BILL MOYERS: What will it take to prevent the next one?

NEIL BAROFSKY: Got to break them up. I mean, it is not a simple thing to accomplish, necessarily. But it's a very simple solution. And what you see, I think, kind of amazingly, is how many more people have come to this view over the last year or so. It used to be a lonely perch that we sat on. Former special inspector generals, a couple of academics.

But now you have people like Sandy Weill, the architect of Citigroup. And sure, too little too late, after he made all of his money off creating these Frankenstein monsters. But even he now recognizes that we have to break up the banks. You have senior officials at the Federal Reserve recently coming out in favor of this. The vice chair of the FDIC, a very strong advocate for breaking up the banks. And you hear it a lot more in members of Congress– that are supporting this notion. So to me, on the one hand, it's absolutely essential. If we really want to get to the point where we don't have to bailout a bank, we have to make it so that no bank is so systemically significant and large that its failure could bring down the system.

BILL MOYERS: Are they up to their old tricks?

NEIL BAROFSKY: The banks? Sure. I mean, you know, so we had this regulatory reform of Dodd-Frank in 2010, which, you know, left them intact and inside. But it had all of these rules and all of these regulations that needed to follow. And right now it is hand to hand, trench warfare, combat with those lobbyists spending all that money on campaign contributions, on, you know, flooding the decision makers and the regulators with comment letters and endless meetings.

And pressuring members of Congress to put pressure on the regulators, to water down the rules, to basically get as much back to the good old days where they would have free reign to print money, take advantage of their too big to fail status, bully and push out the little guys, take advantage of consumers. And that's what all of these efforts area about are to preserve these very, very core profit streams that they had before.

And that's right now is where the battle is being waged. Not on TV, you know, not necessarily out in front, but behind the scenes where the next set of rules are being forged on what they're going to be able to do and how they're going to be able to do it…

Hurricane Watch

Real-Time New York City Storm Surge Tracker

Courtesy of Zero Hedge 

Curious how many feet of water the rats in downtown NYC are under right now? The real-time answer is available, courtesy of the NOAA, and this tide height tracker at New York’s Battery.

h/t @cbm1971

 

Live New York Web (And Sound) Cam with Zero Hedge

Because the only thing more informative than watching a shut down New York get blown (away) by Sandy, is hearing it live. Watch, and listen, as downtown New York, very much unprepared for what may be a record flood surge, gets the Venice treatment.

 

See also Hurricane Sandy: Litmus Test for America’s Utilities

By Jen Alic at OilPrice.com

About this time last year, Americans lost faith in their power companies, which failed to respond effectively to restore power outages resulting from a storm. This past summer, a series of outages under less dire weather circumstances demonstrated that the country’s electricity distribution network was bad and getting worse…. Keep reading >

 

US Equity and Option Markets Are Closed

Courtesy of Jesse’s Cafe Americain

 

US Equity and Options Markets are closed today because of the oncoming hurricane. The NYSE is closing for the first time in 27 years.

Bond markets are open, but will close early around noon.

The Holland and Battery Park Tunnels will be closing this afternoon, and the bridges will be closing when the winds intensify.

No man is an island, but Manhattan is.

There are blizzard warnings going up on the lee side of the storm, as the moisture of the hurricane meets the Canadian cold front.

This is likely to be a multi-day event.

My meteorologist friend said that the hurricane may present a new record low pressure reading for this area when it makes landfall in New Jersey, most likely a little to the north of the Atlantic City area.

Millions of people may lose power, and some of them for seven to ten days.

If you are in this area, make any last preparations if you must, but be prepared to stay in your home and ‘hunker down’ for the next two days. Listen to any public advisories, and if requested to evacuate follow instructions.