I'm a little surprised they are still offering Option ARM and stated income loans now.

Why not? The Federal Home Loan Banks are taking these on, aren't they?

California housing market coffin...

Meet nail.

Cheers,
prat

Markel writes:
Well, I guess all self-employed people should just show themselves to the exits now.

That's nonsense. I've been self-employed and twice got conforming, full doc, 30 yr fixed, mortgages. All I had to do was show my tax returns for two years--not exactly a huge hurdle.

Curtail? As in... They're still going to be doing some?

Curtail Definition | Definition of Curtail at Dictionary.com

Our potty-on-the... er... a.. Johnny-on-the-spot financial regulators are going to have something to look into here.

RD : " The "free put" is hard to resist. All their customers did it to them. Now they are doing it to the taxpayer. "

BRAVO! That about sums it up for our world today. Maybe we can all send this to our Congresspeople, except, most of them wouldn't understand what it means.

All the airlines are losing money again. Did Fitch, Moody's, et al., downgrade the airlines which have shut down or sought bankruptcy protection yet?

ac

we have had our disagreements in the past but i sure do enjoy your humor

btw, it was me.

ac

btw, it was me.

Well, let's get our singals straight next time. That was my pump. =/

short Oil , right here , right now

june 08 118.40

short Oil , right here , right now

june 08 118.40

That's pretty ballsy. Again, I'd be more tempted to buy puts on some oil related ETF if I were going to do that.

I'm a scaredy cat tho.

Time to buy into UST installers, tank manufacturers and pump makers. Reminds me of all of the storage tanks that went in during the early 1970's. Everyone will stockpile to dodge the ever increasing prices.

I have been cleaning up leaking UST's since 1989 that were mostly installed in the early 1970's. Great revenue stream....

Apocalypse Ben just keeps goin' to town on the US economy:

Crude hits new intraday high of $119.74 a barrel

short Oil , right here , right now

june 08 118.40

I gotta admit, I'm baffled why anyone would want to short a runaway freight train like this instead of just going long puts, as was mentioned earlier. You can hedge your bets across the calendar, and even if you're horrifically wrong your worst case is being out the put premia. (Granted, I don't know what the option spreads are pricing in these days, but honestly the volatility of crude hasn't been all that high lately.)

Oil at $118 could be the Nazz at 5,000. Then again, it could be the Nazz at 3,500 - just before the blowoff top that broke pretty much every single short-side speculator.

Caveat emptor.

$120 oil breaks OPEC. They will not tolerate those prices. At $120 just about every alternative is viable. New electricity from coal, nuclear, hydrocarbon liquification, solar, even wind and tidal make economic sense. And with solar roofs across the Sun Belt natgas and oil markets become glutted. Trust me. THe OPEC nations will "feel our pain" and "give" us a break rather than lose their franchise.

Rob Dawg is right about the stimulating effect on high oil prices on alternate energy sources. His analysis on OPEC's reaction is right on -- but only if their long-term reserves are healthy.

If the Sauds, for example, know that their production capacity is on the edge of a steep decline, they might choose to take the money now and run.

The long-term production capability of the Saudi oil fields is about the best-protected secret in the world right now, and it affects all arguments on the price and availability of petroleum.

$120 oil breaks OPEC. They will not tolerate those prices. At $120 just about every alternative is viable.

Yes, but what surplus production capacity do they have at this point. The Saudis probably only have 1.5 million BPD extra they can pump. With global consumption at something like 85 million that's not adding much.

If the Sauds, for example, know that their production capacity is on the edge of a steep decline, they might choose to take the money now and run.

thats exactly right. the point is they don't have the ability to increase production. the oil price will be going up whether we like it or not and whether or not solar, wind, nuclear, hydro get ramped up.

JS

sure you can. just put up a big sail on your cartop.

BofA, Countrywide to Curtail Mortgage Lending

Hmmm... guess haloscan doesn't allow "strike" tags.

Not exactly. You cannot power your gas-powered car on coal, nuclear, wind, or solar; however you can power your electric car on those.

And they must be selling like hotcakes, too, because none of the dealers near me have a single one in stock!

Electric cars are an alternative, but the batteries are very expensive. IIRC in some European countries gas is $7/gallon but they still haven't moved to electric cars. $120 oil probably makes a Toyota-style hybrid economically advantageous but we're still a ways from switching to all-electric cars.

Anonymous writes:
Bob in Ma-
also self-employed...
you will be able to get a 30 year fixed however the interest rate you get will not be similar to anything you've ever seen before....that is what the difference will be

Bullshit. I got the publicly quoted, best rate at both banks. I got the same exact terms as the person anyone else who qualified.

Of course, I actually declared all my income. If some of you are among those hiding income, you may well have a problem.

"Electric cars are an alternative, but the batteries are very expensive. IIRC in some European countries gas is $7/gallon but they still haven't moved to electric cars. $120 oil probably makes a Toyota-style hybrid economically advantageous but we're still a ways from switching to all-electric cars."

It needs a better battery technology than we have now. If one of those showed up -- good capacity, long life, affordable when economies of scale kick in -- the changeover might occur with deceptive speed.

There are always one or two of those on the horizon: mirages, up 'til now, but they won't all be, forever.

That said, yesterday's paper said hybrid sales are up 30 percent on the year in the U.S. Still only 4 percent of the market, but at that growth rate could be 20 percent in not many years, especially as the range of models expands.

idoc writes:
someone made a good pt that oil futures are not in contango; they are in backwardation meaning future prices are lower than spot. what this means is there is no bubble, only shortages.

Actually, it could merely be a reaction to the extreme inflation in prices. In such situations, peoples' instinct is to hoard, which sends up the spot price. In that case, the shortage is artificial.

@Rob Dawg,

You are most welcome at the HARM abode anytime, and I'll keep you posted on any BBQ related program activities . FYI: I'm now a Bay Aryan.

Microwave airplane... very interesting. How does that work?

If people aren't finding the correlation between gasoline use and pop density, they aren't looking very hard. Population density and gasoline use by state and clearly correlated even though pop density by state is a very crude measure: Real Environment: Population Density and Gasoline Consumption

And of course if you go internationally the correlation is much stronger. The US doesn't have a lot of variation in how people live in different areas. Most people live in medium-density suburbs in almost all states.

Fair Economist writes:
If people aren't finding the correlation between gasoline use and pop density, they aren't looking very hard.

If people are trying to change the subject from energy footprint to gasoline use they aren't being very forthright.

BTW, it is -association- not correlation. The reason is there is no such thing as population density as an independent variable. it is tied up in many other criteria.

HARM,
Microwave powered aircraft. Exactly as it sounds. Electric motors and rectenna receiver array. Energy density far below harmful levels, minor shielding to below typical cosmic high altitude exposures. My sstudy was for ultrahigh aaltitude station keeping functions. A single craft with satellite type coverage areas and cell phone bandwidth at land line prices.

The problem? Well it is a focused directed energy system. If it can be focused and aimed it will be focused and aimed. You want fries with that?

we still need to build the new power plants, phase in electric vehicles, and upgrade our electricity distribution network (which in their current form will probably not hold up if everyone switches to electric cars). The price tag of all of that goes up with the price of oil.

My calculations say that California can convert its' entire roads network; generation, installation and vehicles to all electric for the cost of 7 years of 2006 gas price consumption and pay pennies per mile thereafter. At current prices I'd estimate 4-5 years.

Good point. Also building infrastructure for alternative energy sources (extraction, storage, and distribution) is highly energy intensive. Even if space aliens bring us nuclear fusion power technology today, we still need to build the new power plants, phase in electric vehicles, and upgrade our electricity distribution network (which in their current form will probably not hold up if everyone switches to electric cars). The price tag of all of that goes up with the price of oil.

So for those saying that alternative energy becomes cost effective at $120 oil... better make sure that the cost effectiveness numbers are not based on $70 oil.

Its really not that big of a deal. I worked as a chem eng in energy during the ugly daze of the 80s... the key is, was and will be conservation & it isn't all that painful.

The difference between most viable alt energy & conv fossil fuels is how much capacity of production you have to have vs supply of the various (multiple energy sources) you have to have to be able to meet demand. Most alt energy supplies fluctuate - think solar (during the day only) and wind (only when & where blowing).

But if we have traditional energy capacity even with limited supply coupled to alt sources variable supply but lots of it... and conserve... you end up with a GREATLY extend 'peak oil' situation without huge disruption in standard of living - some changes for sure but not the draconian end of the world everyone foresees.

Start changing people's demand patterns - and they will change - you push the crisis out way farther if not forever.

The most important economic metric going forward will be per capita GDP per BTU or KW consumed. In an increasingly service oriented global economy there is no reason we have to increase energy consumption to increase economic activity. The reverse should occur & can.

I've sat around with industry folks & played napkin what-if and the biggest thing that has to happen if we want to effect change is better price signals from producers to consumers - that will drive conservation (step one)... rest will follow. That, thank God, is finally happening. $100/bbl oil is a good thing. Learn to love it baby.

Where to begin? Okay, first we are comparing brand new, cutting edge, designed for efficiency, small, niche vehicles to the 8.8 year old average US automobile (23mpg) in this efficiency comparison. Second, don't fall for the lie of omission in comparing electricity to chemical fuels. Only 31% of the energy used to make grid electricity actually gets to the customer. When that electricity is used to charge a battery this can be 60% but never less than 20% losses. So, getting useful work out of an EV is about 25% efficient. the claims of 0.3-0.5 kW-h/mile is 1000-1700 BTU/mile. For conventional vehilces 1.58 kW-h/mile is 5,400 BTU/mile or 23 mpg as calculated but the equivalency ignores passenger loads. While there is no definitive information it is highly likely that EV useage resembles the average occupancy of the commute segment of road users; 1.2 passengers while the US average is 1.57 passengers.

You see where I'm going with this, EVs are not anywhere near as efficient (yet) as their proponents claim. Within the next few years as solar comes down in price and/or increases in efficiency and as technology improves maybe but not yet. Oh, and it is important to note that a huge portion of the claimed transportation efficiency derived from EV designs can be applied to IC primary movers; low cD, narrow tires, limited capacity, range, advanced materials energy recovery, etc.

In short, every bit of advancement helps but there's no magic bullet here swithing to electricity from hydrocarbons.

Californians use 414.4 gallons of gas per capita per year (8th lowest in the US). 14.5 billion gallons. How much electricty is that? 530,982,417,478.593 kW-Hours. California can generate at present 46,000 Megawatts. We'd need and additional 61,000 Megawatts of energy to make it into the battery. Let's not mince words, we'd need 3 times as many power plants as we have now. Too hard to grasp? How about 28 new Diablo nuclear power plants (2x9.5 million mW-H reactors). Actually more like 40 Diabos. [insert lame ; "better the Diablo you know" joke here] And what would that cost? Nukes cost about $2000 per kilowatt to build. $122 Billion dollars. How much does that gas we Californians guzzle cost? $47 billion. Surprised? Gets better. Anyone here doubt that an order for 40 nukes could garner a volume discount? Yeah, like half price. A 50 cent per gallon surtax would pay the capital construction costs in 7 years. And what would the electricity cost? Remember we don't have any capital costs to amortize. 1.5-3 cents likely. We pay 14 cents now.

We could do it and it would make sense but we won't do it because of a combination of boiled frog syndrome and the cognitive dissonance of the eco-warriors.

Nota bene; the above was calculated using 2006 data.

Cobradriver writes:
Rob Dawg,
Do you see PV coming down to the 1.00/watt range ??? At the current 3.50-5.00/watt my return would even out after 30 years(I hate subsidies). Do you think the latest gen 3 nukes could be bought for less than 1000/kw with volume discounts.

Rationing would change the whole equation on gas usage. Todays its "can I charge my customers enough to offset what I have to pay for fuel", then it would become "what vehicle would give me the efficiency to get everything done with the limited gallons I'm alloted".

Sounds weird, but it might change peoples motivations.